moving to museum trusts - egeria

Moving to Museum Trusts: Learning from Experience

Advice to Museums in England & Wales

Part 1: Strategic Overview Adrian Babbidge, Egeria with Rosemary Ewles, Egeria Julian Smith, Farrer & Co

Museums, Libraries and Archives Council Victoria House Southampton Row London WC1B 4EA © MLA 2006 ‘Historical Background’ and ‘The First Devolutions’ in Chapter 1.2 and the Annex to this report includes material previously published as Charitable Status for Museums © 1998 Adrian Babbidge The rights of Adrian Babbidge. Rosemary Ewles and Julian Smith to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1985 MLA is the national development agency for museums, archives and libraries, advising the government on policy and priorities for the sector. Our mission is to enable the collections and services of museums, archives and libraries to touch the lives of everyone. MLA is a Non-Departmental Public Body sponsored by the Department for Culture, Media and Sport. A CIP catalogue record of this publication is available from the British Library ISBN 1-903743-93-1 MLA is not responsible for views expressed by consultants or those cited from other sources. This report is intended for guidance only and is not a substitute for professional advice. No responsibility for loss occasioned as a result of any person acting for failing to act can be accepted by MLA or the authors. It does not fully include any changes in the law after 1 January 2006.

CONTENTS

__________________________________________________________ Egeria: Transfer to Museum Trusts: Learning from Experience – Strategic Overview ii

Executive Summary 1 Summary of Recommendations 6 1 Introduction 10 Background to the Study 100 Scope & Definition 11 Organisation of the Report 12 Methodology 13 Acknowledgments 13 2 Context & Trends 15 Organisational Basis 15 Historical Background 15 The First Devolutions 18 Public Managerialism & Museum Trusts 21 New Labour & Best Value 22 Local Government in 2006 25 The Future 26 Museums Trusts in Other Countries 27 3 Options for Service Delivery 29 Options Adopted 30 Change Outcomes other than Devolution 32 o Joint Arrangements 32 o Contracting-out 33 o Outsourcing to a Non-Profit-Distributing Organisation 34 o Outsourcing to an Independent Museum 35 Museum Development Trusts and Friends Organisations 35 Transfers from Charities to Local Authority Museums 36 University Museums 38 4 The Devolved Museums 39 Allerdale Borough Council: The Helena Thompson Museum 41 Bexley London Borough: Bexley Museum Trust 43 Birmingham City Council: Thinktank 46 Bolton Metropolitan Borough Council: Smithills Hall 48 Braintree District Council: Braintree District Museum 49 Cheltenham Borough Council: Holst Birthplace Trust 51 Chichester District Council: Pallant House Gallery 53 Coventry City Council: Coventry Transport Museum 56 Dacorum Borough Council: Dacorum Heritage Trust 58 Denbighshire County Council: Bodelwyddan Castle 59 Dudley Metropolitan Borough Council: Black Country Museum 63 Durham County Council: The Bowes Museum 66 Harrow London Borough: Headstone Manor Museum 70 Inner London Education Authority: Geffrye & Horniman Museums 71 Kent County Council: Museum of Kent Life 72 Sheffield City Council: Sheffield Industrial Museums Trust and 74

Sheffield Galleries & Museum Trust o Sheffield Industrial Museums Trust 75 o Sheffield Galleries & Museum Trust 78 o Sheffield Outcomes 81 Southwark London Borough: South London Gallery 82 St Helens Metropolitan Borough Council: The World of Glass 84 Torfaen County Borough Council: Torfaen Museum Trust 85 Waverley Borough Council: Godalming Museum 87 West Dorset District Council: Bridport Museum 91 York City Council: York Museums Trust 92 5 Lessons Learnt & Issues Raised 98 General Characteristics 98 The Review Process 99 Culture/Leisure Trusts 99 Legalities of Transfer 100 The Voluntary Sector Compact 102 Partial Transfers & Hybrids 103 Funding Agreements & Timeliness 103 The Change Process 104 Boards & Trustees 108 o The Chair 108 o Board Size & Committees 109 o Board Recruitment 111 o Board Remuneration 111 Recruitment of Directors/Chief Executives 112 Relationships with Core Funders 112 Annual Reports 114 Publication of Information 115 Pensions 116 Networking 117 Partnerships & Synergies 118 ‘Stabilisation’ 119 When Things Go Wrong: Case Study 120 Museum Trusts: A Successful Approach ? 122 Annex: Constitutional Forms of Outsourced Organisations 126 o The Industrial & Provident Societies 126 o The Charitable Trust 126 o The Charitable Company Limited by Guarantee 126 o The Non-Charitable Company Limited by Guarantee 128 o The Company Limited by Shares 128 o The Community Interest Company 129 o The Charitable Incorporated Organisation 129 Bibliography 130 Appendix A: Membership of Steering Group 135 Appendix B: List of Consultees 135

__________________________________________________________ Egeria: Transfer to Museum Trusts: Learning from Experience – Strategic Overview iii

EXECUTIVE SUMMARY 1. This report focuses on museums that have been ‘devolved’ by local authorities.

They are distinguished by the following characteristics:

a) they are charitable bodies (‘museum trusts’) specially created to deliver a local authority’s museums services, with the intention of a long-term relationship between the council and the museum trust;

b) all the council’s museum responsibilities (including strategic planning)

are transferred, not only day-to-day management responsibilities; and

c) there is a sharing of risk between the council and the museum trust.

2 Although the period since 1975 has seen substantial discussion about the benefits and disadvantages of devolving public authority museums, the number of occasions when this has taken place is few. However, the idea has recently acquired a new impetus - of the 23 devolutions in England and Wales, more than half have taken place during the past ten years, and others are in train. In only one case has the position been reversed. Devolutions have taken place in museums of all sizes and scales, with eleven having incomes of under £1 million, and six over £2 million.

3 All these devolutions are from local authorities. Universities – which like local

authorities are conglomerate organisations – have found them irrelevant, as universities already benefit from the fiscal benefits that come to charities, and devolution would risk divorcing them from the Arts and Humanities Research Council, their main funding stream. In organisational terms, university museums often have their own committees or influential supporters who act as their advocates both in the university and without. The reality is that in many cases the museum is already at arm’s length from its sponsoring university - the challenge is to reduce the risk of drifting apart from the main funder, an issue also for museums that have been devolved for some time.

4 Museum trusts have not been the only destinations for museums that have

moved out of local authorities. Others have been:

National museums (Merseyside County Museums became what is now National Museums Liverpool);

Joint Committees (such as those for Tyne and Wear Museums, the North

of England Open Air Museum at Beamish, and for a number of the museums operated by the Hampshire County Museums Service);

the private sector (eg at Weymouth and Walsall); and

outsourcing to an existing independent museum/heritage organisation (eg

West Park Museum at Macclesfield to Macclesfield Museum Trust and

__________________________________________________________ Egeria: Transfer to Museum Trusts: Learning from Experience – Strategic Overview 1

Baysgarth House Museum in North Lincolnshire to Barton on Humber Community Heritage Arts and Media Partnership).

5 Only rarely do the reasons for devolutions appear to have derived from a wish

to improve service to the public, or a museum’s efficiency and effectiveness. Usually the causes given were:

a) to develop a newly-established museum service or capital project (while

common in the 1970s and 1980s, this is becoming increasingly infrequent);

b) as a response to funding difficulties (an increasingly frequent

circumstance);

c) as a consequence of pressure from the Arts Council and its Stabilisation Scheme;

d) as an outcome of a Best Value review; or

e) as a consequence of moves to rationalise a service’s branch museums.

6 The general advantages experienced by the devolved museum trusts are

reported to be:

a) a sense of direction, freed from the wider corporate issues of local authorities and the ability to focus on their core business;

b) flexibilities and freedoms to establish plans and policies appropriate to the need of current and potential audiences and users as well as stakeholders;

c) management structures that enable timely decisions at the most appropriate operational level;

d) a sustainable framework, based on funding arrangements that create a stable basis for business planning and development;

e) the opportunity for cultural change in the museum organisation;

f) opportunities to benefit from the fiscal advantages of charitable status and to increase income through commercial activity and sponsorship;

g) opportunities to make new connections and develop new partnerships

(both in the museum sector and outside) relevant to the museum’s core purpose; and

h) a greater attractiveness to donors or persons considering long-term loans

of collections.


7 The contrast between the reasons for change and the advantages cited as a consequence suggests that many organisations began the process with very little idea of the positive outcomes that might emerge. On the one hand this may represent museums wearied by a process of continuous internal restructurings and reorganisations; or, on the other, it may represent a lack of ambition for improvement in local authorities and/or their museum services.

8 Where, following review, devolutions did not take place, the reasons normally

given are:

a) Strategic

1) it was believed that other means (such as a major Lottery project) would transform the museum;

2) the museum was perceived to be ‘working well’, so there was no

reason to change;

b) Political

1) there was principled political hostility to ‘hiving off’ services;

2) stakeholders (especially trades unions) were opposed to what was regarded as ‘privatisation’;

c) Emotional

1) devolution being perceived as ‘selling the family silver’.

d) Practical

1) there was no substantial and immediate financial incentive to devolve;

2) previous devolutions had led to financial or organisational difficulties for the council;

3) the council’s internal advice had presented legal obstacles;

4) there was no political or management impetus from within the council;

5) change in key personnel (whether political leadership or senior

management) stifled the process of change;

6) the council/museum claimed insufficient capacity or resources, whether to undertake a comprehensive review or manage the devolution process; and

7) the vested interests of museum staff (especially heads of service) who

feared loss of job or working arrangements) or council corporate or


back-office functions who feared the impact of change on their operations and cost-base.

9 In most cases there was no single reason for lack of change. In some cases there was a difference between ‘official’ and ‘real’ reasons. Where devolutions did occur, key factors appear to have been:

a) champions within the council at Elected Member, Corporate Director or

Head of Museum Service level (experience suggests change requires champions at two of these three levels as a minimum);

b) an external stimulus – though not essential, strong advocacy for the

museum from the local community facilitates the process; and c) self-confidence within both council and museum that the result would lead

to a substantial improvement.

10 Where devolutions did occur, they were of the following types:

a) full – where the museum/service is transferred as a going concern, with all its assets, to a museum trust; or

b) hybrid – where responsibility is devolved to a museum trust, as are some

assets, but others are retained by the Council (eg staff remaining part of the council and seconded to the museum trust).

11 Some museums have been transferred (or are in the process of transferring)

to ‘culture/leisure trusts’ which embrace a wider range of cultural activities, and this route is also being considered for others. While the benefits of a strategic approach to cultural policy is self-evident, whether there is advantage in translating this into operational arrangements is open to doubt. Generally, the relatively small scale of museum operations within the culture/leisure trust’s operations transplant the difficulties they face within local authorities, while making advocacy to the funding body more difficult.

12 Local authorities are unlikely to make any immediate and substantial financial

benefits from devolution. In terms of Gershon, the process generates ‘non-cashable’ efficiencies. Given that few museum services are generously funded, they are (at least initially) unlikely to require less funding under devolved arrangements than when they were delivered directly; indeed, there may be an immediate need for some additional investment to compensate for deferred building maintenance. In the longer term, reduction of local authority funding may compromise the museum trust’s financial viability. Rather than immediate financial savings, key objectives for devolution should be the intention to:

a) develop the museum service and continuously improve its quality, in line

with the philosophy of Best Value ;


b) undertake significant investment in the museums service and access additional funding;

c) promote and market the museum service to an expanded market;

d) provide accountability to the community on whose behalf the museum

holds the collections, responding to user needs;

e) provide an economically-viable future for the museum, based on robust business planning; and

f) widen the financial support for the museum within the community.

13 Devolved museums have usually been incorporated as charitable companies limited by guarantee, governed by boards of between five and fifteen members, of which up to 20% are nominated by the core-funding local authority. There is some evidence that the size and composition of boards is leading to two tiers of trustees – those that are members of an executive committee who participate in the museum’s governance, and a larger group who meet less frequently and who discharge what is a scrutiny rather than a governance role.

14 Having a ‘two tier’ board of trustees can be undesirable and smaller boards

might well represent a better way of working. If a need is felt for greater contact with stakeholders, or for a larger forum for consultation and discussion, then it is always open to create an ‘advisory council’ which can provide an opportunity for debate, discussion and consultation, without the need to compromise the effectiveness and efficiency of the museum’s board. Whatever structure is preferred, it is essential that corporate governance arrangements are defined and formally agreed by the trustees, and supported by appropriate systems and processes.

15 Lacking any generally-accepted consensus of what constitutes ‘a successful

museum’, it is difficult to say with confidence that devolved museums are any more successful than those that have remained within local authorities. Devolution in itself is no guarantee of better governance or management. The museum sector lacks easily-verified and reported measures that connect with museums’ missions and core values, and incorporate reliable indicators of long-term organisational and financial health. Very few museums have made use of holistic models, such as the European Foundation for Quality Management (EFQM) Model.

16 Additionally, the following general points can be made:

a) There is no single, shared Business/Operating Model common to all devolved museums, the balance between earning income from visitors, winning grant funding, and commercial development differs from museum to museum.

b) Devolved museums have performed well in attracting additional funding,

though most of this comes from public funding sources available to other __________________________________________________________ Egeria: Transfer to Museum Trusts: Learning from Experience – Strategic Overview 5

museums, and it appears that relatively little effort has been put into cultivating potential private donors, which has a longer lead-time and where benefits are less immediate.

c) They are generally responsive and entrepreneurial, though many have

created new bureaucracies to replace those of their local authority predecessors. Their external funding bodies have their own reporting requirements which can prove onerous.

17 The risks faced by the devolved museums are:

a) the risk of over-rapid growth that takes the museum beyond the levels where it can be sustained by its Business/Operating Model;

b) stagnation of core funding increasing the income required from other

sources beyond realistically-achievable levels; c) over-reliance on external project funding which places areas of activity at

risk when that funding dries up; d) a change of political philosophy within the local authority that requires an

end of devolved arrangements and return of services to direct delivery; e) changes in taxation (and especially in VAT) which inadvertently place

pressure on free-admission museums; f) increasing pension liabilities compromising the museum’s core budget; g) the inability of the museum to recruit high-calibre trustees to replace the

founding board or senior management; and h) poor quality internal audit, regulatory and reporting structures.

Summary of Recommendations 18 The following recommendations are made as a result of this study: Reviews

a) While good governance requires that regular structural reviews be undertaken to ensure that local authority museum services are delivered in the most effective and efficient manner, this needs to be balanced with the impact of conducting such reviews on operations and opportunities. It is RECOMMENDED that :

(1) there should be five clear years between the end of one review

and the start of the next, and that reviews should be conducted in a timely way that places the minimum disruption on services; and


(2) reviews should be thorough, strategic assessments with terms of reference that take into account all those factors associated with best value and improving customer service, not merely financial savings, identifying both cashable and non-cashable efficiencies; and

(3) the results of reviews should be published, and the reasons for the

option selected, and the evidence that led to that conclusion, clearly stated.

b) Reviews should give thorough consideration to the range of options for

delivering museum services, which will sometimes include a single not-for-profit organisation that will incorporate all an authority’s cultural services. It is RECOMMENDED that, in considering outsourcing to culture/leisure trusts, the proposed arrangements should provide both local authorities and their museums with an equivalent, or greater, advantage than would come from devolving their museum services on a separate basis.

The Process of Devolution c) While recognising that local circumstances differ, it is RECOMMENDED

that: the relationship between councils and devolved museums should be encapsulated in a formal legal document that:

(1) has a defined term of not less than three years; (2) indicates the funding that the council will make available

throughout that period, and when and how it will be paid; (3) defines the services the museum trust will provide in return for the

grant, and how this is to be reported to the council; (4) specifies any obligations on the council (eg building maintenance

and meeting insurance costs); (5) defines in precise terms the defaults on both sides that would lead

to termination before the end of the agreement, indicating where liabilities would lie; and

(6) agrees the process at the end of the agreement, whether a timely

negotiated renewal procedure or a reversion to the council at its cost.

d) It is RECOMMENDED that partial transfers should only be considered in

exceptional circumstances where some irresistible factor precludes full devolution.


e) It is RECOMMENDED that all relationships between councils and museum trusts comply with The Compact on Relations between the Government and the Voluntary and Community Sectors, and its counterpart Local Compacts.

f) It is RECOMMENDED that, where local authorities agree to devolve their

museum services, sufficient resources should be made available to ensure that the Shadow Board of the newly-formed museum trust is able to access its own advice and support, and the council should indemnify the Shadow Board so that no liabilities fall on its members in the event of the devolution not taking place.

g) The legal costs of drafting appropriate legal documentation is substantial,

and if this process is gone through in every case there is a substantial duplication of expenditure from public funds. It is RECOMMENDED that MLA commission model documentation (including governing instruments, funding, transfer and collections agreements). So to do would relieve the costs on public funds, facilitate the process of implementation, and embed good practice.

Corporate Governance h) It is RECOMMENDED that local authority nominees to boards of trustees,

or chairs of museum trusts who are local authority nominees, should not be replaced on a change of political control in the council, and should serve the remainder of their full term of office. Accountability should be exercised by other means, such as Funding Agreements.

i) While there is a need for a small Shadow Board during the

implementation process, this group should not thereafter become embedded as an executive committee. It is RECOMMENDED that the governance of museum boards should rest, in practice as well as constitutionally, in the hands of boards as a whole, and that board composition and membership should be designed to enable this to happen. It is further RECOMMENDED that all museum trusts should have audit committees to scrutinise both audit arrangements and financial processes/systems within the museum trust, the membership of which should not include office-holders.

j) Charity annual reports and financial information are now more widely

available than ever before. The Charities SORP 2005 requires a common standard of reporting from all charities. It is RECOMMENDED that all museum trusts, in meeting those requirements, provide key performance information in absolute terms, and indicate trends over recent years. It is further RECOMMENDED that DCMS and MLA produce guidance on the reporting and accounting requirements related to the SORP, with the intention of providing common practice within the museum sector that enables greater comparability between accounts.


k) It is RECOMMENDED that all museum trusts should have formal schemes for reporting their work to their sponsoring council, and that responsibility for discharging this role should fall on the chair and board (with the chief executive in support) rather than on the chief executive and senior management acting on behalf of the board;

l) It is RECOMMENDED that all museums trusts should encourage a culture

of openness and follow good practice in providing public access about the relationship with their sponsoring local authority, their governance and performance, using their website and through other means to disseminate such information.

Management m) In view of increasing difficulties in recruiting candidates of calibre to head

museum trusts, it is RECOMMENDED that MLA should investigate whether the nature of entry-level job descriptions and specifications discourage the recruitment and retention of people with the aptitude, skills, temperament and acumen necessary to manage museums on a business-like basis.

n) The national difficulties over pension provision affect museum trusts as

much as any other part of society. It is particularly important that museum trusts should be seen to have fair personnel practices. It is RECOMMENDED that:

(1) all museum trusts that adopt pension schemes other than the

Local Government Pension Scheme should provide details of that scheme with the details sent to all potential job applicants, indicating how it differs from the LGPS; and

(2) the Museums Association and Association of Independent

Museums investigate the viability of a multi-employer pension scheme, whether operated by the Pensions Trust or a commercial provider.

o) It is RECOMMENDED that the Museums Association and/or the

Association of Independent Museums should consider providing network events for informal exchange of experience and information specific to devolved museums.

Funding

p) While museum trusts have been successful in bids for public funding,

efforts to attract private and philanthropic giving have been more modest. It is RECOMMENDED that museum trusts develop long-term strategies to cultivate private and commercial donors to supplement funding from public sources.


CHAPTER 1.1 – INTRODUCTION Background to the Study 1.101 In the summer of 2003, the (then) Chief Secretary to the Treasury, Paul

Boateng MP, invited Sir Nicholas Goodison, ‘to review the effectiveness and efficiency of support to regional and national museums and galleries to help them acquire works of art and culture of distinction that might otherwise be sold abroad, and to make those items accessible to the public.’ His report (Goodison, 2004, 18) stated:

‘Some museums financed by local authorities have set themselves up

as charitable trusts or companies limited by guarantee. There are three advantages, it seems to me, of doing this. First, it can transform the leadership of a museum because experienced and well-connected trustees can extend the museum’s contacts, bring management and strategic skills, and give guidance and advice to the director and staff. Second, it can release energy and enthusiasm, because the director and staff are no longer part of the local authority’s hierarchy but answerable to the trustees. Third, it can improve money-raising prospects, because it is more likely that private and charitable donors will give to a charitable trust than to a local authority. I hope that other local authorities and museums, including university museums, will be inclined to study the examples set by Sheffield, York and the Bowes Museum and consider whether it could be advantageous for them to follow suit.’

1.102 These observations led to Sir Nicholas recommending that the Museums,

Libraries and Archives Council (MLA) should make available to other local authorities and museums a summary of the means by which museum trusts were set up, their reasons for doing it, their agreements for continued local authority or other public funding, and their experience as independent entities since they were set up.

1.103 MLA and its regional agencies were already receiving frequent requests for

advice from local authorities reviewing future arrangements for governing and managing their museums, and in particular trust status. We have therefore been commissioned to undertake a study that provides both a strategic assessment of the issue, and practical advice for those local authorities that are considering this option.

1.104 We have also been asked to make recommendations based on identification

of the strengths and weaknesses of trust governance in relation to other options, giving special attention to practical issues connected with funding, trustee recruitment and longer-term sustainability, and to identify any further work that may be necessary or desirable.


Scope & Definitions

1.105 The study focuses on museums that have been ‘devolved’ by local authorities to organisations that have been specially created by the council for that purpose. This is in distinction to arrangements under which museums have been outsourced to an existing body which takes on that role in addition to other activities. Other forms of arm’s length delivery – joint arrangements with other local authorities, or outsourcing to commercial or community companies – are touched on solely for comparative purposes, though some issues dealt with will also be relevant to these other types of arrangement.

1.106 As defined in this study, devolved local authority museums are distinguished

by the following characteristics:

a) there is an intention of a long-term relationship between the council and the museum trust;

b) all the council’s museum responsibilities (including strategic planning) is

transferred, not only day-to-day management responsibilities; and

c) there is a sharing of risk between the council and the museum trust - the trust takes the financial risks associated with its freedom of action, its trustees the reputational risks that would come with financial difficulties, and the council faces the financial and political risks that would arise should the trust fail and transfer back become necessary.

1.107 The geographic remit of our Report is limited to England and Wales. Since

Devolution in 1998 the Welsh Assembly Government has been the competent authority for local government in Wales. Where the position in Wales differs to that in England appropriate references are provided. Though many of the issues in the Report are applicable in Scotland and Northern Ireland, they fall under different legal arrangements. Some of the key issues relevant to the Scottish legal position have been dealt with elsewhere.1

1.108 The following conventions have been adopted throughout the Report:

The term ‘museum’ is taken to mean all those institutions (including art galleries) that meet the Museums Association’s definition of a museum, which is:

Museums enable people to explore collections for inspiration, learning and enjoyment. They are institutions that collect, safeguard and make accessible artefacts and specimens, which they hold in trust for society.

The term ‘museum trust’ is used in a loose sense to include any museum operated by an organisation whose primary purpose is the operation of a museum, and has been registered as a charity


1 Scottish Museums Council Local Authorities and Charitable Trusts (1997)

with the Charity Commission or with HM Revenue & Customs, rather than in the narrow sense of a charity created by Trust Deed. Its charitable status is implicit, in view of its role as a ‘trustee for society’, in the Museums Association’s definition.

‘Trustee’ is a member of the governing body of a museum trust,

whether or not titled as such. Organisation of the Report 1.109 The report is in two parts. Part I takes a strategic overview by:

reviewing the factors that have led to a change of status, whether from direct provision to trust, or from trust to direct provision, or to a decision to retain the status quo, in the context of government and other policy;

evaluating the experience of those former local authority museums that

have adopted the charitable trust style of governance;

assessing the overall impact of trust status, both financial and practical, on institutions where change has taken place; and

considering a methodology for the assessment of the effectiveness and

efficiency of such bodies in relation to other means of governance, in relation to what constitutes ‘a successful museum’.

1.110 It includes the following elements:

Chapter 2 describes the context and trends that have led to the devolution of local authority museums to charitable bodies, and why some authorities have not chosen to pursue this option;

Chapter 3 describes the options for service delivery by local authorities;

Chapter 4 provides case studies for museums that have moved to trust

status, comparing their fortunes with local authority and National museums, and includes a cautionary case study of how things can go wrong; and

Chapter 5 considers whether or not, or in what way, these devolutions

have been successful, including some consideration of what constitutes a successful museum.

1.111 Part 2 deals with the process of devolution, and is intended to provide

practical help and guidance for those considering transferring a museum from a local authority to a specially-created museum trust. It includes chapters that:

provide background information on charities, their application to museums

and the benefits of charitable status;


describe organisational issues concerning the process of transfer; and

explain the legal and practical issues relating to the process of transfer. Methodology 1.112 This report has been prepared using the following sources:

annual reports and financial statements of the devolved museums, whether at Companies House or the Central Register of Charities;

reports and committee papers of local authorities that have considered or

adopted the museum trust option;

Museum Registration returns held by MLA;

publications listed in the Bibliography; and

interviews, either in person or by telephone, or through discussion groups, with a sample of people who have gone through either service reviews or the devolution process, either recently or in the more distant past (these consultees are listed in Appendix B).

Acknowledgements 1.113 The report has been prepared and written by Adrian Babbidge, assisted by

Rosemary Ewles, and advised by Julian Smith of Farrer and Company who reviewed the legal content. He is grateful to:

the members of the study’s Steering Group, whose membership is listed

at Appendix A., and especially to David Uffindell, Export Licensing Manager at MLA, who managed for the project for MLA;

Emmeline Leary and Alex Roberts of MLA for making available Museum

Registration records since 1989, which provided a key information source;

Sir Nicholas Goodison, whose review initiated this study and who provided valuable comments on the draft report;

Janet Dawson, Fellow of the Institute of Pensions Management who

provided advice on pensions issues; and

the large number of people who have responded to requests for information and provided their experience and advice.

1.114 However, some institutions and individuals were not able to provide or (for

reasons of confidentiality or to protect their intellectual property) felt unable to share certain types of information. Normally we have been able to overcome


this difficulty by accessing that information through other public sources though, as a consequence, there may be some gaps.


CHAPTER 1.2: CONTEXT & TRENDS

Organisational Basis

1.201 While the organisational structures of UK museums are far from

homogeneous, they invariably fall into one or other of the following two categories:

where the function of operating a museum is the primary purpose of the

parent organisation; or

where the museum’s operation sits alongside other functions within a larger conglomerate organisation that has broader aims and purposes.

1.202 The primary source of funding is not a determinant of organisational type.

Thus, in the UK, single purpose organisations embrace both large National museums core-funded by the State and small, volunteer-run, self-funding local museums. Conglomerate arrangements include museums run by local authorities, universities and charities, whether or not any form of subsidy from the parent body is required (though normally it is).

1.203 Yet, traditionally, UK museums have been classified on the basis of their

primary source of funding rather than by their organisational form. Until the 1970s museums other than those funded by the state, local government or universities were termed ‘private’, irrespective as to whether they were run for personal profit or were operated by charities. Yet charity is a term of art which indicates that the organisation’s activities are exclusively for the public benefit, and as a consequence are subject to regulation by the State. Museums have moved between the constituent parts of this broad definition of ‘public sector’ throughout their history.

Historical Background

1.204 While during the 17th and 18th centuries the first museums in the UK that were

open to the public were owned by either universities or private individuals, from the turn of the 18th and 19th centuries their development was heavily influenced by learned societies dedicated to the pursuit of knowledge. Many of these – such as the Royal Institution of Cornwall, the Yorkshire Philosophical Society and the Society of Antiquaries of Newcastle upon Tyne - established museums to house and display collections that were brought together by their members.

1.205 In the cities and towns – and especially in those that grew as a consequence

of the Industrial Revolution – museums were also a key element in the social movement for education, instruction and self-improvement. The Museums Act 1845 authorised the levying of rates to provide museums in places with a population of more than 10,000. This and subsequent enabling legislation


throughout the 19th century enabled a growth in municipal museums,2 based on an assertion of civic pride. However, even in some cities and large towns it was the founding learned society that funded and operated the local museum, an arrangement which in some cases lasted until the end of the 19th century, when their resources became insufficient to maintain the collections and buildings, and local authorities stepped in to sustain their achievements. As has been shown for Yorkshire3, while the need of the learned societies to divest themselves of what had become liabilities was common, the motivations of the civic authorities that accepted them varied according to local circumstances.

1.206 The passage of museums into local authority control characterised the cities

and larger towns rather than more rural areas where, until the County Councils’ legislation of the 1880s, local government lacked a comparable scale of resources. Thus, in these areas, learned societies continued to be the main providers of museums well into the twentieth century – a role that continues in counties such as Wiltshire, Dorset and Cornwall. However, for the first half of the twentieth century, the trend was for museums operated by learned societies and charities to move to local authority control.

1.207 While in some cases acquisition by the local authority led to the museums and

their collections becoming the council’s corporate property, this was not invariably the case. Occasionally (as is the case in of the Buckinghamshire County Museum at Aylesbury) the collections and the museum building that housed them were leased from the county society to the Council. Elsewhere (eg the Royal Scientific Institution at Bath, the Hertfordshire County Museum at St Albans (now the Museum of St Albans), and Newarke Houses Museum (at Leicester), the council became sole trustee of a charitable trust that either constituted the whole museum or collection or building within which the collections were housed.

1.208 In other cases a similar mechanism was adopted by benefactors wishing to

‘ring-fence’ their gift from the general assets of a local authority - for example the Russell Cotes Museum at Bournemouth and the Mappin Art Gallery at Sheffield. In the 1950s, the Army Museums Ogilby Trust (AMOT) encouraged the relocation of regimental museums to civilian (local authority) museums, with a purpose-designed Trust Deed providing oversight by the regiment and the means of ring-fencing its collections within the museum’s wider holdings.

1.209 However, this separate charitable status was rarely recognised by the outside

world (and sometimes not even by the local authority). Such museums were generally regarded as being operated by the local council, and local authority regimes came to characterise governance arrangements for local museums in England and Wales.

1.210 The framework for local government in England and Wales was laid by the

Municipal Corporations Act 1835, the Local Government Acts of 1888 and


2 For a general history of museums in the UK see Lewis (1984) 3 Davies (1989), 31 - 42

1894, and the London Council Act of 1899. The structure adopted by those Acts lasted until the Local Government Act 1972, which introduced a new system. Throughout this period, local authority museums (whether or not they were solely discharging charitable trusts) were generally constituted as council departments, with their directors/curators reporting to ‘museum committees’. The museum was in fact, a discrete local institution.

1.211 This changed following the 1972 Act, with the new councils heavily influenced

by the Bains Report.4 Rather than the professional units that typified the old local authorities, Bains advocated the role of chief executive as a leader supported by a senior management team, the need for a vision defining the purposes and policies of a council, the adoption of corporate management to secure integration between departments, and the creation of conglomerate departments that incorporated a range of linked activities.

1.212 Following the models illustrated in the report, museum committees ceased to

exist in favour of ‘recreation and leisure’ committees, museum heads lost their direct access to committees and found themselves (perhaps at second or third tier within the department) subordinate to Leisure Directors who only rarely came from a background that had given any experience of museums. While this gave some museums the opportunity to thrive through a more joined-up approach to cultural provision, and to benefit from synergies with other services (notably libraries and tourism), this was by no means the universal experience.

1.213 Meanwhile, the 1960s and 1970s saw a new generation of museums being

created, frequently in response to the rapid disappearance of some aspect of the nation’s industrial history. While many were supported by local authorities, they were largely driven by enthusiasts or community groups. With the Ironbridge Gorge Museum Trust as their prototype, they were invariably constituted as charities, and usually as companies limited by guarantee. Over time they became known as ‘independent museums’. All were reliant on plural funding. European structural funds and tourist board grants were major sources of capital finance; revenue costs were met by admission charges and trading income. The availability of labour through government job creation schemes provided opportunities for both operations and development. Voluntary workers also made a substantial contribution.

1.214 However, notwithstanding the success of these museums in raising funds

from a variety of sources, most relied on the support of public bodies (such as local authorities or new town development corporations), whether in cash or kind, to maintain their viability. Only a handful of public museums have ever been profitable in a strictly-commercial sense, and independent museums have generally depended on some sort of subsidy from public funds.

1.215 This new breed of Independent museums transformed the British museums

scene. With their customer focus, marketing skills and business flexibility – and the need to generate revenue to pay their way – they were in sharp


4 Bains (1972)

contrast to most local authority museums, which had seen little change - or investment - for decades. Local authority museum workers looked on the independent sector with a mixture of suspicion (believing that their commercial imperative was inconsistent with the public service ethos of museums) and envy (especially of the flexibility and public profile they enjoyed).

The First Devolutions

1.216 In 1976 (Sir) Neil Cossons, then Director of the Ironbridge Gorge Museum,

spoke at the Museums Association Conference in Bristol5. Having analysed what he regarded as the governance and management shortcomings of local authority museums, he suggested that they should be ‘hived off’ as charitable museums on the Ironbridge model. He suggested that the advantages of this for the museum would be:

a) a wholehearted belief in, and in working for, the museum’s best interests,

untrammeled by the larger corporate issues of the local authority;

b) freedom from local politics, but having the capability of political clout as an independent local institution;

c) a focus on the need for high-quality, well-motivated staff;

d) academic and entrepreneurial freedom for staff to perform creatively and

effectively;

e) the flexibility to respond to changing circumstances so that the museum could adapt and evolve.

1.217 This proposition coincided with the new councils created by the 1974 re-organisation of local government being confronted by the first of what came to be successive, substantial reductions in their central government funding. Some of these authorities had been seeking to develop new museum projects, often as part of economic regeneration programmes, or strategies to provide comprehensive leisure provision for their districts.

1.218 Realising that these ambitions could never be met within the lower level of internal resources, a few councils adopted the Ironbridge model to develop such schemes. Dudley Borough Council had already agreed to develop its social and industrial history collections in this way, and the Black Country Museum Trust was incorporated in October 1975. In 1977 the Torfaen Museum Trust was established to take over Torfaen Borough Council’s museum service, and progress a project that had come in the train of local government reorganisation in 1974, but which had stalled as a consequence of the financial pressures on the Council.


5 Cossons (1976)

1.219 Exhibit 1.1 shows the chronology of devolutions from local authorities to museum trusts. It shows that, until the 1990s, the number of local authorities that took this route was very small, and the majority have been established during the past fifteen years. Further, this action has only been taken by larger councils over the past ten years, starting with Sheffield in the 1990s.

Exhibit 1.1: Devolutions from Local Authorities to Museum Trusts Year Museum 1975 Black Country Museum 1977 Torfaen Museum Trust 1985 Pallant House, Chichester 1986 Godalming Museum Trust 1991 Braintree Museum Trust 1991 Geffrye Museum 1991 Horniman Museum 1992 Museum of Kent Life 1993 Dacorum Heritage Trust 1994 Kelham Island Museums Trust (later Sheffield Industrial Museums

Trust) 1995 Bodelwyddan Castle Trust 1997 Thinktank 1998 Sheffield Galleries & Museum Trust 1999 St Helens 2000 Holst Museum, Cheltenham 2000 Bexley Heritage Trust 2000 Bowes Museum Trust 2001 Harrow Museums Trust 2001 Smithills Hall & Park Trust 2001 South London Gallery 2002 York Museum Trust 2002 West Dorset Museum Trust 2003 Coventry Transport Museum (Museum of British Road Transport) 2004 Scarborough Museum Trust 2005 Helena Thompson Museum, Workington 2005 Northampton Museum Trust

1.220 The lack of an immediate response to Cossons’ proposed model is not

surprising, given the following barriers:

a) Legal

1.221 Unlike other jurisdictions, local government in England and Wales has always been constrained by the doctrine of ultra vires - what local authorities can or cannot do is circumscribed, and limited to the powers granted them by Act of Parliament. Many local authority lawyers doubted whether the powers in the Public Libraries and Museums Act 1964 were sufficient to enable devolution of powers. The powers in section 111 of the Local Government Act 1972 to do anything that is ‘calculated to facilitate or is … conducive or incidental to the


discharge of any of their functions’ also appeared to be doubtful 6. While Part III of the Local Government & Housing Act 19897 appeared to provide powers to support the creation of ventures that would increase employment, the influential view of the Solicitor to the Audit Commission was that these powers were, in themselves, not sufficient to empower councils to devolve services.

b) Political

1.222 While the earliest devolutions took place under the Labour governments of the

1970s, the election of a Conservative administration under Margaret Thatcher in the general election of 1979 led to reforms that changed the political environment within which such changes might take place. 8 These included:

narrowing the autonomy of local councils by the imposition of fiscal

restraints by central government;

a re-definition of the role of local government from service provider to enabler, encouraging the delivery of services by the private sector or not-for-profit organisations,9 with the introduction of a competitive tendering regime for some local authority services;

encouragement to relinquish direct control over council housing stock to

non-profit housing corporations, and, under the Education Reform Act 1988, to transfer responsibility for polytechnics to central government and schools to local management; and

the establishment of quasi-autonomous non-governmental

organisations (quangos), with members appointed by central government and dominated by business people, to discharge responsibilities that had previously been exercised by municipal authorities.

1.223 Unsurprisingly, such changes were resisted by local authorities reluctant to

relinquish power and authority. Any such move – however well-intentioned or beneficial it might appear – was likely to be opposed, and externalising services was widely seen to be the same as privatisation, even when, as in the case of transfer to a charity, it was rather a move to another part of the public domain. Government’s habit of referring to museums other than those directly controlled by public authorities as ‘private’ did not help in this, Nor did the ambivalent tone of the Museums & Galleries Commission’s 1991 Report on Local Authorities and Museums, 10 which consistently used the term ‘privatisation’ to describe the museum trust option, while making the superfluous recommendation that transfer should only be considered ‘for positive reasons’.


6 which proved to be the correct view as judged by the Court of Appeal in Credit Suisse v The

Borough Council of Allerdale QB 306; [1996] 4 All ER 129; {1996] 3 WLR 894,CA 7 ss 33 – 35 8 Stewart & Stoker (1999) 9 Goodwin (1992), 118 - 120 10 MGC (1991), 26 - 27

1.224 The idea that quangos were an appropriate form of government was not only resisted by local politicians. Commentators suggested that ‘government is being handed back to the ‘new magistracy’ from which it was removed in the counties more than a hundred years ago. Elected representatives are being replaced by a burgeoning army of the selected – the unknown government of our society’.11

1.225 These factors would inevitably be taken into account by museum workers,

especially given that many were left-of-centre in their politics. The sparsity of successful precedents discouraged others from following the same route, especially given the embattled nature of many museums. Central government budget cuts reduced funding for local government (whose expenditure, as a proportion of total government spending, decreased substantially in the 1980s and 1990s) and created very real difficulties.

c) Professional

1.226 Museum staff, besides having natural concerns about their own job security and

terms and conditions of employment, subscribed to codes of professional conduct that emphasised that museums discharged a ‘trustee’ role in safeguarding collections for future generations. Irrespective as to how far this was true in a strictly legal sense (most local authority museum collections were the corporate property of the council, to do with as it wished12) the duty to safeguard this inheritance was strongly-felt. Any risk to the legacy was to be avoided, and what were generally termed ‘private’ museums were, by definition, to be regarded with suspicion.

Public Managerialism & Museum Trusts

1.227 The 1980s and 1990s saw a number of new local authority-funded museums

(such as at Manchester Museum of Science and Industry, Richmond on Thames Museums, and the New Forest Museum at Lymington in Hampshire) being established using the independent museum model, but there was no major movement to devolve local authority museums to such trusts. While the 1980s saw much debate about the principle of such transfers, it had very little practical impact. When metropolitan county councils were extinguished by the Local Government Act 1985, the structures set up to replace their museum services led to the incorporation of the former Merseyside museums as a National institution,13 and created a local authority joint committee for Tyne & Wear Museums. In London, The Iveagh Bequest at Kenwood passed to English Heritage, and the Geffrye and Horniman Museums to the Inner London Education Authority (ILEA).

1.228 However when, five years later, ILEA’s abolition necessitated new governance

for the Horniman and Geffrye Museums, the selected option was the museum


11 Jones & Stewart (1992) 12 Babbidge (1991), 259 - 60 13 The Merseyside Museums and Galleries Order 1986 (SI 1986 No 226) under s 46 of the

Local Government Act 1985

trust (rather than the alternative of absorption by an existing National museum) though with government funding and a board nominated by Ministers, that took over ILEA’s responsibilities.

1.229 The transformation at those two museums was generally regarded as dramatic.

Both had strong reputations for pioneering educational activities and temporary exhibitions, but in other respects they had stood still for decades. Yet at the Horniman, described by its then Director as ’a time capsule in terms of museum development’, the change enabled a major refurbishment of the museum building, as well as the implementation of the donor’s original intent for the Museum and its adjacent gardens to be managed and developed together (rather than being operated separately, which had been the position in the previous local authority regime). The assessment was that ‘more has been achieved in the past two years than in the entire preceding decade’.14

1.230 This, and the achievements of other governance models at Liverpool and Tyne

and Wear, helped break down the view that this was the only possible model to deliver a successful museum service. That most independent museums appeared to thrive, and that the constituency maintained a high profile throughout the 1980s also helped. A speech by the Minister for the Arts at the Museums Association conference at Newcastle upon Tyne in 1992 advocated devolution, and local authorities were encouraged to consider this option by Treasures in Trust, the government’s review of museum policy15 published in 1996.

1.231 Treasures in Trust maintained the view that the operation of museum services

should be a matter of local discretion. However, it suggested that the museum trust should be considered, not only for its perceived advantages in terms of plural funding, but also for management benefits. The review maintained the view that mirrored arrangements at a national level – that museums should hold collections under the control of a dedicated board with no responsibilities other than those for the museum and its direction. Its director or curator should be directly responsible for the collection and accountable to the museum’s board.

1.232 This policy development coincided with the growth of ‘agency theory’ (the

study of relationships between principals and agents) and market economics. Trends in business management, and the ideas of management gurus such as Michael Porter, honed on experiences in the world of commerce, exerted a major influence on the public sector. This ‘public managerialism’ is typified by:

accountability, the monitoring of performance and incentives for good

performance;

separation of strategy from delivery, and a focus on management rather than policy;


14 Boston (1992) 15 DNH (1995), 18 - 19

an inclination to introduce market mechanisms for delivery, including competition and contracting-out;

responsiveness to customer preferences; and

disaggregation of large bureaucratic structures, with autonomy having to

be earned within a framework of strong central control. 1.233 The same period saw local authorities experience a substantial reduction in

their expenditure, and greater central government intervention in what they did receive. Between 1990 and 2004, the proportion of locally-raised taxation fell from 58% to 28%16. This was principally due to the abolition of locally-determined business rates and the introduction of standard national non-domestic property rates. Previously, regional and sub-regional centres and market towns had been able to justify funding the provision of facilities of more than local significance by the commercial benefit that accrued to local businesses from people coming to use them. The introduction of a common national rate removed this justification.

New Labour & Best Value 1.234 The Labour Party in opposition had espoused the benefits of applying private-

sector management techniques to the public sector. Tony Blair, speaking as Leader of the Opposition to the shadow assembly of the Local Government Association in July 1996, made it clear that the emphasis should be on ‘the best possible outcome in service delivery regardless of who actually delivers the service’ and ‘it would make no sense to suggest that a local service should be kept in-house for ideological reasons if it would be more efficient and would serve the public interest better to deliver it in another way.’17

1.235 Within a month of the election of the New Labour government in May 1997 the Local Government Minister announced to Parliament that the government was pressing forward with its manifesto commitments to modernise local government. In July 1998 it set out its framework for the modernisation of local government in the White Paper, Modern Local Government: In Touch with the People, which described local government as a partner of central government in meeting local needs as well as national aims, and particularly the four public service priorities of education, health, crime and transport. Councils were seen as having a significant role in making sure that priorities were reflected locally, with central government checking delivery through performance measures. Those that performed well would be awarded greater freedoms and flexibilities than those that did not.

1.236 A series of Acts of Parliament reformed both the structure of local government (by replacing the traditional committee structure with executive Cabinets and, where the local population requisitioned it, elected Mayors) and how it operated (including the introduction of external performance


16 ODPM (2004),12 17 Local Government Chronicle 26 July 1996

inspections). The relationship between central and local government was crystallised.

1.237 The consequences of these changes for local authority museums can be

characterised as follows:

they have tended to be amalgamated with other services as part of larger operating units, which are themselves elements within large directorates/departments, placing them at the margins of the council and distant from decision-making18;

they have created an imperative need (not always encouraged by the

council’s corporate management) to cultivate the Council’s political leadership (whether an elected Mayor, Leader or relevant Cabinet portfolio holder) and key top managers, without whose support museums cannot achieve profile and whose support is essential if their funding is not to be vulnerable;

they have had to respond to the growth of performance indicators, first

recommended in 199119 and now refined in nationally-published performance indicators for number of museum visits, number of museum uses, and number of visits by schoolchildren in organised groups;

there has been a need to reconcile the council’s corporate priorities,

which are largely influenced by central government, with the needs of the Museum and its audiences, which may differ – the art of ‘managing paradoxes’;20

changing patterns of employment, with short-term contracts (often

externally-funded) becoming more commonplace; and

the requirement to meet corporate strategies in all areas, and to develop bids for external funding, has stretched museums’ capacity.

1.238 Many of these issues are encapsulated in the Best Value and (in England) Comprehensive Performance Assessment (CPA) regimes. Best Value is a duty21 on councils: to make arrangements to secure continuous improvement in the way they exercise their functions, having regard to a combination of economy, efficiency and effectiveness. Originally planned as a review of all the services provided by each local authority during a five-year cycle, the scale and resources they absorbed soon led to a greater emphasis on cross-cutting generic evaluations. Now local authorities have a deal of freedom in


18 Kawashima (1997), 20 19 Audit Commission (1991) 20 Kawashima (1997), 153 21 Local Government Act 1999 Part I

deciding the scope and timing of Best Value reviews, which are published in their annual Best Value Performance Plans. 22

1.239 CPA, introduced in 2002, is an annual external inspection aimed at providing a rounded picture of a council’s performance. It has taken over from Best Value as the primary performance assessment and improvement mechanism for local authorities. From 2002 to 2004 councils were rated as ‘excellent’, ‘good’, ‘fair’, ‘weak’ or ‘poor’, but from 2005 these categories were replaced by star ratings ranging from four star (highest) to 0 star (lowest). Councils are also now rated on their progress towards improvement, and are scored as 'improving strongly', 'improving well', 'improving adequately' or 'not improving'. These terms are known as 'direction of travel'. The more challenging CPA framework introduced on 2005 places greater emphasis on councils' role as community leader, giving recognition to the way in which they are increasingly using partnership working to deliver local services. Underpinning the new framework is a measurement of councils' ability to fulfill their responsibilities in a way that is the most cost-effective.

Local Government in 2006 1.240 Local government is fundamentally different in 2006 to what it was fifteen

years earlier, both in governance and management. While national regulation through the national performance framework, represented by Best Value and CPA, has clearly been highly influential in stimulating change, it is not alone, and a series of other initiatives have positively encouraged local councils to become more outward looking. These include:

Local Strategic Partnerships (LSPs) - a top level partnership bringing

together organisations from the public, private, community and voluntary sector within a local authority area, with the objective of improving people's quality of life;

Local Area Agreements (LAAs), designed to improve co-ordination

between central government and local authorities and their partners, working through the Local Strategic Partnership;

Local Public Service Agreements (PSAs), which identify specific targets

and rewards for defined performance improvement by local authorities, and are specifically aimed at improving performance in relation to areas of public service delivery.

Local Compacts, based on the national guidance,23 to promote

understanding of how the relationships between central and local government and the voluntary sector can be developed for mutual


22 Following the creation of the Welsh Assembly Government in 1999 the requirement on local

authorities in Wales to follow Best Value has been modified, and new Wales Programme for Improvement introduced. Though the framework remains similar to that in England, it is claimed to be more flexible, and less bureaucratic, than the Best Value regime.

23 The Compact on Relations between Government and the Voluntary and Community Sector in England (Home Office 1989)

advantage, and reflect central government’s policy of engagement with the voluntary sector. 24

1.241 Increasingly, the degree to which a local authority is engaging with its

stakeholders is being seen as a touchstone for its general effectiveness.25

1.242 Responding to these national initiatives, local government in England has

adopted a positive response to plural working. Independence, Opportunity, Trust – A manifesto for local communities26 recognises the benefits in empowering local community organisations to manage assets and provide services. Understanding the Future: Museums and 21st Century Life, DCMS’s consultation paper on future museums policy, considered alternative structural issues to be fruitful areas for future debate.27 Of the 75 responses to this important document only a handful took up the invitation to express feelings about museum trusts, and all bar two were non-commital. While this could suggest that devolution has ceased to be the controversial issue it was in the 1990s, perhaps a more probable explanation is that museums are disinclined to engage with such issues.

1.243 It should be noted that the foregoing reflects government policy in England. The Welsh Assembly Government takes a different approach. Its policy is that where executive Assembly-sponsored public bodies undertake functions that are governmental either on policy or delivery, they should be brought in-house, on the basis that Ministers are responsible for allocation of public money, and the Assembly for scrutinising the arrangements made by Ministers.28 While the functions of the National Museums and Galleries of Wales were deemed to be essentially non-governmental, and its current governance arrangements will remain, the Welsh Assembly Government’s overall approach reflects the reluctance of government in Wales – whether national or local – to adopt the active encouragement of service devolution that has been taking place in England.

The Future 1.244 The CPA regime on local authorities in England will continue into the

foreseeable future. Like all public sector initiatives, it is informed by the definitions of efficiencies in the Gershon Report:29

reduced number of inputs (eg people or assets whilst maintaining the

same level of service provision;

lower prices for the resources needed to provide public services;


24 eg in HM Treasury (2003) 25 DETR (1998), 23 26 Local Government Association (September 2004) 27 DCMS (2005),30 28 Official Record of the Welsh Assembly 30 November 2004: Statement by the First Minister 29 Gershon (2004), 6 - 7

additional outputs, such as enhanced quality or quantity of service for the same level of inputs;

improved ratios of output per unit cost of input; and

changing the balance between different outputs aimed at delivering a

similar overall objective in a way which achieves a greater overall output for the same inputs.

1.245 These efficiencies can be regarded as ‘cashable’ – they release savings for

recycling and use for another purpose – or ‘non-cashable’ – higher quality goods or services have been purchased for the same price.

1.246 For the future, the underlying tenets of CPA and Gershon are likely to

continue to encourage English local authorities to consider outsourcing service provision, and in the case of museums to consider devolution to trusts.

Museum Trusts in Other Countries

1.247 It is not only in England that new business approaches to managing public

institutions have had an impact. Decentralisation has been a key feature of many countries that were formerly typified by the ‘unitary state’, especially in Eastern Europe, where the pace of change has been quick, in response to a rapidly evolving political agenda. Both decision-making and the day-to-day management of key resources have been delegated away from central ministries and municipal governments

1.248 In most cases these delegations have been to new autonomous public bodies, such as the conversion of leading museums into établissements

publiques in France or the conversion of leading Netherlands museums into independent Foundations, run by supervisory boards of trustees. There are similar moves in Italy and Spain, though in many cases the absence of a tradition of non-governmental (charitable) organisation blurs the edges between devolution and privatisation. In these countries statutory safeguards usually regulate the public interest in those museums and their collections.

1.249 Such legislation is usually absent in countries (including the United States of

America) that have ‘common law’ legal systems, which usually have a ‘third sector’ based on the English experience of charity law. The museum trust approach is at its most developed in New Zealand, where the major regional museums at Auckland (the Auckland War Memorial Museum), Christchurch (the Canterbury Museum) and Otago (the Otago Museum) are incorporated as museum trusts by Local Act of Parliament, with their revenue budgets funded by a precept on the local authorities in their locality.

1.250 Though the trend to devolve continues to increase throughout the world, in

absolute terms the number of museums that have moved in this direction are small. Even in the United States, where there is a more substantial


independent sector than in the UK, relatively few of the local councils that operate museums (and faced by similar financial pressures as those experienced by their UK counterparts), have devolved museums, and where this has happened the results have not always been the happiest. 30


30 see para 1.578 and following

CHAPTER 1.3 – OPTIONS FOR SERVICE DELIVERY

1.301 In England, the impact of both Best Value and CPA, and the government’s

encouragement of partnership working with the private and voluntary sectors, has been to stimulate local authorities to give serious consideration to whether there are alternative means of service delivery, Most local authorities have dropped any principled opposition to such arrangements. Both commercial enterprises and the third sector of non-governmental organisations now undertake work that complements – and in some areas substitutes for – tasks formerly undertaken by local government.

1.302 Besides devolution to museum trusts, the following options are available to

deliver museum services:

a) Direct delivery, where the Council organises and manages the service from within its own organisation, which represents the status quo in most authorities;

b) Joint arrangements with other local authorities, whether by amalgamating

their museums into a single service under a joint committee of the participating councils (as is the case at Tyne & Wear), or as a commercial arrangement with another local authority providing museum services (though there are as yet no examples of this in England or Wales);

c) Outsourcing, whether:

1) by contracting-out, for a specified term on the basis of a specification and contract procured under European Union procurement regulations (eg Walsall Museums Service (which does not include the New Art Gallery) is among the twenty council functions that have been managed from September 2005 by Fujitsu Services, an international service provider company);

2) to a culture/leisure non-profit-distributing organisation (NPDO) either

on the same basis as to a commercial contractor or through a special purpose vehicle created by the Council for that purpose (such as CiP at Hounslow); or

3) to an existing independent museum (eg the West Park Museum at

Macclesfield is managed for the Council by the Macclesfield Museum Trust, and the Margate Museum by the East Kent Maritime Museum);

1.303 The various constitutional forms adopted in the case of (2) and (3) above are

described in the Annex to this Part of the study.


Options Adopted 1.304 There are 410 principal local authorities (ie excluding town, parish and

community councils) in England and Wales. Of these, in September 2005,

142 councils (35%) made no direct museum provision; and

of the 268 that did: o 204 (76%) delivered some or all of those services directly; o 40 councils (15%) did this through joint arrangements with other

local authorities, including joint committees; o 23 councils (8%) have devolved, or are in the process of devolving,

their museum operations, in whole or part, to museum trusts; o three councils have outsourced their operations to culture/leisure

trusts; and o two have contracted-out their operations to a commercial operator.

1.305 A survey for the Group of Museum Directors in 2000 suggested that at that

time 60% of museum services were considering or had considered museum trust status, mostly in advance of Best Value. Though only five had decided to further pursue the matter, 75% anticipated some other form of reorganisation or restructuring during the coming two years. 31

1.306 The scope and scale of these reviews are highly variable. While a few are in-

depth, thorough and externally moderated, many are internal, some are superficial, and a few ill-informed. It is not surprising, therefore, that in most cases the chosen option appears to be ‘no change’, though in a handful of cases it has led to modifications to enable a greater contribution to the museum’s governance from outside the council.32

1.307 A number of reasons have been given for no change:

a) Financial – devolution would:

not lead to any substantial benefit in council expenditure; and/or

the costs of making the transition would outweigh any immediate

savings; and/or

the council would have to commit itself to major expenditure to remedying the effect of deferred building maintenance over many years;

b) Benefits for the museum being offset by disadvantages for the Council’s

corporate centre – especially where many other functions had been


31 referred to in Conybeare (1997) 32 for example, at Bath, where though the financial case for a museum trust was not made, the

review led to the constitution of an independent board to advise the local authority on future investment decisions.

outsourced, central support functions saw further outsourcing as compromising the viability of the current level of core operations;

c) Political – that Elected Members’ (and sometimes their Officers) were

opposed to any form of devolution inasmuch as this would be contrary to their political beliefs (a reason only ever given anecdotally, as the Best Value regime is supposed to discount considerations of dogma);

d) Emotional – the process was perceived by Elected Members, irrespective

of the council’s continued ownership, as the equivalent of ‘selling the family silver’;

e) Opposition from stakeholders - normally Trades Unions, though attitudes

differ from Union to Union, and even from branch to branch;

f) Current success, with devolution seen as only being necessary for ‘failing’ organisations;

g) Opportunity costs – the view that the time and effort being put into

devolution would be better deployed in securing other opportunities, such as those arising from Renaissance in the Regions;

h) Lack of capacity - either within the council generally, or within the museum

specifically, especially (in the latter case) where staff were planning or implementing a major Lottery-funded project;

i) Unhappy previous experience - especially where leisure trusts had been

devolved on a ‘deficit funding’ basis33. or where the Council retained liability for building repairs caused by previous deferred maintenance;

j) Change of key personnel, whether Elected Members or Officers, with a

consequent shift of outlook, experience, confidence or leadership.

1.308 No statistical analysis of these reasons has been undertaken. In most cases there was no single reason for choosing to maintain the status quo and, even where a single reason was given, conversation suggested that there were invariably one or more other causes that were likely to have been as, or more influential, than those officially given. It also appears that there were several other factors that may have had a major impact but were not reported:

a) there was no external stimulus from articulate sections of the community

that were dissatisfied with the museum’s performance;

b) there were no champions for change at Elected Member, Corporate Director and Museum levels, a conjunction of interest in at least two of these being necessary to move a proposal forward34; and


33 ie the Council was required to meet the leisure trust’s operating shortfalls 34 see para 1.504

c) self-interest on the parts of heads of museum services who, not unreasonably, were not inclined to take on further pressures that might (on past experience) result in loss of their current job or status, or who derived as much job satisfaction from participating in the corporate politics of local government management as from museum service provision, or on the part of their line manager(s) who also felt personally threatened by the consequences of loss of functions.

1.309 This list of causes – both stated and unstated – is considerable and

represents a substantial hurdle to any change of status. On the one hand, these factors could be seen to inhibit change, discourage modernisation and reinforce a workforce that is inherently conservative in its outlook; on the other they act as a useful counterweight so that it would be very difficult to execute change that is generally regarded as not being in the best public interest of the museum.

Change Outcomes other than Devolution

Joint Arrangements

1.310 The Local Government Act 197235 permits local authorities, if they so wish, to deliver services through pooling their resources under the umbrella of a Joint Committee. These set a levy on the participating councils (which appears as part of their individual expenditure). They may have their own Officers and administrative structure though, invariably, one or more councils provide the Committee’s secretariat, financial services, personnel and other support services. In every case one of the partners provides the legal personality under which the Joint Committee operates, in terms of contractual relationships with staff and suppliers.

1.311 Local authorities have also been able to use the powers in the Local Authorities (Goods and Services) Act 197036 and the Local Government Act 200037 to create agency agreements so that one council may provide, on a rechargeable basis, a service on behalf of one or more other authorities. The Local Government Act 200338 enables councils to establish companies to sell on a commercial basis services related to the functions it discharges. No museum in England and Wales is operated on this basis.

1.312 Research into the impact of the joint arrangements in metropolitan districts that followed the abolition of metropolitan county councils in 1986 39 suggests that several factors appear to influence the success of joint arrangements, and in the light of experience appear to have a general relevance:

a) Political culture - it appears easier for joint arrangements to work best

where, historically, there is a single political tradition, such as in the


35 s 101 36 s 1 37 s 2(1) 38 s 95 39 Travers, Biggs & Jones (1995)

North-East or Hampshire, or where participating councils have been schooled in consensual politics through long periods of no overall control.

b) The nature of the service - the greater the significance of a service on the

political agenda, the more likely joint arrangements are to come under pressure: those dealing with technical services are more likely to survive. Thus how ‘political’ museum issues are will dictate the suitability of this form of management. Additionally, joint arrangements that are not, in effect, required by external pressures from government or other funders are less likely to be sustained.

c) Expenditure – lacking any powers to precept the member authorities of

museum Joint Committees, the levies on participating councils (where the spending of the committee is divided up and added to the individual budgets of constituent authorities) can be controversial, both in the apportionment and the impact of the expenditure on the budgets of constituent councils.

d) Levels of local control - the desire of participating councils to exercise

local control over a service can be disruptive.

e) Competing priorities - common priorities amongst all the participating councils make joint arrangements easier to sustain.

f) Officer networks - the existence of strong and cohesive professional

networks between the participating councils strengthens joint arrangements.

1.313 Many of these issues can be addressed through the medium of good forward

planning, regular and effective communication between the constituent councils, and effective Officer advocates regularly rehearsing the success of the arrangements to Elected Members.

Contracting-Out

1.314 Providing it does not delegate its own statutory functions, a local authority can

provide any service it is empowered to provide by means of a contract or agency, in accordance with s. 1 of the Local Government (Contracts) Act 1997. Following the requirement for Compulsory Competitive Tendering of certain services since the 1980s, local government now has a long experience of managing such arrangements. However, the disadvantages of this approach are:

a) the contract will probably need to be subject to competitive tendering

arrangements, and may well be subject to the EU Procurement Directive, requiring detailed specification and widespread advertising;

b) profits go to shareholders, not to benefit the service/community;


c) there are no fiscal advantages, and the only funding sources would be those of the commercial money market;

d) staff would transfer to the contractor with their current terms and conditions

of service, though their longer term position and protection of existing terms and conditions may be more doubtful;

e) although pension rights are transferable by means of the contractor being

admitted to the Local Government Pension Scheme, this would probably require the Council to take on the contingent risk by means of a bond;

f) this type of arrangement may have difficulty meeting the Museum

Accreditation criteria; and g) the contract would have to be acceptable to those institutions which have

been, or are expected to be, funding partners for capital and revenue projects.

1.315 A Private Finance Initiative or Public-Private Partnership scheme to develop

the project would share some of the above disadvantages, and capital projects of this type that involve Lottery investment have proved extremely difficult to construct.

Outsourcing to a Leisure/Culture Non-Profit Distributing Organisation (NPDO)

1.316 There is a long tradition of local authorities providing sports and recreation

services through intermediary organisations, with the first Sports Trust established at Harlow in 1960, which was followed by others at Basingstoke, Poole and Welwyn40. A number of local authority-funded theatres have adopted the same approach. As with museums, the model was not widely used by local authorities that wished to retain their operational control over well-used facilities that would not have been viable without public subsidy.

1.317 The pressure of reductions in funding and the wish for greater management

freedom has fuelled a stronger drive for leisure trusts, perhaps related to the emergence of a commercial marketplace for leisure facilities. In view of this it is perhaps significant that the term ‘leisure trust’ embraces a wider range of constitutional forms than those normally considered for museums and some have been established so that the management and workforce have a financial stake in the success of the new arrangements.

1.318 The Sport and Recreation Trusts Association (SPORTA), established in 1997

to represent the constituency, represents over 100 leisure trusts from all parts of the UK. Research by Leisure-net for SPORTA41 suggested that half of a survey random sample of local authorities were looking to change their current management arrangements over the next two years, with 53% saying that they were looking to use a leisure trust vehicle in some format. As a


40 Simmons (2003), 6 41 reported in Leisure News 9 June 2005

consequence, SPORTA predicts a doubling of the number of leisure trusts operating in the UK over the next two to three years.

1.319 In some cases councils have outsourced all their culture and leisure functions

– including museums - to a single trust. It appears that in these circumstances the benefits and disadvantages experienced by the museum in the local authority are merely transplanted to the new arrangements. Generally, it is the drawbacks – fringe status, limited budgets, no political champion, constraints on actions etc – that outweigh the gains from economies of scale and availability of commercial expertise. It also appears that services with a track-record of contracting experience (eg parks and leisure centres) or that have a statutory basis for their work (eg public libraries) are likely to have an advantage over museums, who lack both experience and status.

1.320 This situation might be ameliorated by creating a separate business unit for

the museum within the NPDO with its own board, but ultimately it would be the NPDO’s corporate centre that would establish (on the basis of its Funding Agreement with the council) policy, strategy and budgets rather than the museum. If museums did not thrive in such an environment in the council, perhaps they are no more likely to do so in a culture/leisure NPDO.

1.321 Additionally, account would need to be taken as to how far such arrangements

fit with the requirements of Museum Accreditation/Designation and, where museums/collections are so recognised, the criteria for Designation and Hub membership.

Outsourcing to an Independent Museum 1.322 Such arrangements are usually defined by a management agreement

between the council and the trust, which may include staff transfers from the council to the independent museum. It is very similar to devolution to a museum trust, and is normally only distinguished by the operation of the council’s museum being only one element of a broad portfolio of activities.

Museum Development Trusts and Friends Organisations

1.323 While not devolving their museum services, some local authority museums

have established charitable trusts to receive private and corporate gifts, as well as to be a conduit for grants from charitable trusts and foundations for which a local authority would normally be ineligible. There are around twenty such trusts, mostly established after 1985. The Central Register of Charities suggests that some, established for a single project, are now virtually dormant. The largest average annual income for the past five years was £269,000, the average £47,219, and the median £26,864.

1.324 While museum development trusts are relatively uncommon, approximately

140 Museum Friends groups benefit museums in England and Wales that are directly delivered by local authorities. Many of these ‘supporters clubs’ are in turn members of the British Association of Friends of Museums (BAfM). Besides providing social activities for members, they raise money for the


museum(s) they support, principally from individuals. Many Friends groups are registered as charities in their own right, which provides additional opportunities for fundraising. Most museums that have development trusts also have Friends groups.

Transfers from Charities to Local Authority Museums

1.325 The assignment of museums is not a one-way traffic, and some long-standing

charitable museums have moved to local authority administration. The Cowle Museum at Stroud has been run by the district council since 1981, under a Charity Commission Scheme that provides for three trustees to be appointed by Stroud District Council, one by the Stroud and District Museum Association and one person with special knowledge of the Stroud district, but gives the Council power to discharge the charity’s day-to-day management. 42

1.326 Allerdale Council assumed responsibility as sole trustee for Keswick Museum

& Art Gallery in 199543 (but it may well revert to a museum trust in the future). The museum at Kendal was for some years operated by the Abbot Hall Art Gallery under a management arrangement, but reverted to direct local authority management in 1998.44 In 1992 the Barrow Borough Council took over the management responsibilities of the Furness Maritime Trust, which had been established in 1987 to establish the Dock Museum; in this case the Trust continued in being as a vehicle for fundraising, which, in recent years has generated around £8,000 pa.

1.327 In other cases, local authorities have mounted rescue operations to museums

that have failed, probably the most well-known example being the involvement of Stoke-on-Trent City Council with the Gladstone Pottery Museum. This Victorian pottery had been identified for preservation in the early 1970s, and the City Council supported a trust established for that purpose. Sufficient funding was secured (around 80% of which came from private individual and businesses) to carry out the first phase of development which was officially opened in April 1975. During the following four years the Museum won awards, achieved substantial press profile, and high visitor numbers, though never enough to achieve the break-even targets established at the start of the project.

1.328 From 1978, and following a change of Director, the Museum’s fortunes

gradually declined. By 1989 it had debts of around £250,000, and visitor numbers were dropping by about 25% a year. To save the situation the City Council stepped in, and in 1990 a new arrangement was put in place. Although the Council’s board representation was in a minority, it provided the chair, and the board was serviced by City Council personnel, which also provided architectural services The Council also acquired the buildings and their contents. It agreed to provide a revenue subsidy of £50,000 pa, and


42 Charity Commission Scheme Sealed 18 February 1983 43 Charity Commission Scheme Sealed 11 January 1995 44 Allerdale Council transferred management of another of its museums, the Helena

Thompson Museum at Workington, to the Workington Museum Trust in 2004.

made a contribution towards the site’s capital development. Although the Museum was leased to the Trust, there was no other formal contractual arrangement such as Funding Agreement to underpin the relationship.

1.329 Although the Museum’s financial position improved, it continued to incur

deficits. The resignation of the chair, (a former leader of the Council) following the insolvency of Chatterley Whitfield Mining Museum, which he also chaired, presaged a short period of confusion. This led, in early 1994, to the Council taking action to protect its investment of more than £1.5 million, by offering to take direct control of the Museum, an offer accepted by the Museum’s board. The Museum Trust was wound up, leading to two redundancies, and the Gladstone Pottery Museum became part of the Council’s museum service.

1.330 Exhibit 1.2 shows financial information for the Gladstone Pottery Museum for

three years as a museum trust funded by the Council and then for three years as part of the Council’s museum service.

Exhibit 1.2: Gladstone Pottery Museum: Financials Pre- & Post Transfer

90/91

Actual

91/92

Actual

94/95

Budget

02/03

Actual

03/04

Out-turn

04/05

Budget

Visitor Numbers 23,175 24,923 31,799 51,816 46,475 46,473

£ £ £ £ £ £Income Core funding 47,090 47,090 131,360 245,390 310,530 360,660Grants/ Donations 1,761 7,416 36,000 7,782 900 500Admissions 28,543 47,060 46,600 120,817 125,500 137,000Trading 5,807 (5,383) 26,220 (28,478) (21,730) (39,810)Other 4,902 4,215 4,000 4,935 6,000 5,000 88,103 100,398 244,180 350,446 421,200 463,350Expenditure Employees 49,226 64,516 149,300 226,659 247,740 302,670Premises 15,988 23,101 30,050 45,258 42,520 41,960Supplies/services 25,551 35,252 64,830 54,157 50,670 41,520Support services 0 0 0 24,372 80,270 77,110 90,765 122,869 244,180 350,446 421,200 463,350 Surplus/(Deficit) (2,662) (22,471) 0 0 0 0 Cost to Council 47,090 47,090 131,360 245,390 310,530 360,660 Subsidy per visit £1.99 £1.89 £4.13 £4.73 £6.67 £7.76 2004 Value (RPI) £2.95 £2.64 £5.35 £5.01 £6.90 £7.76

* = Actual; # = November 1999 – March 2001


1.331 In addition to the direct funding provided to the Museum by the Council, it also provided some services as help-in-kind, which represented a hidden subsidy.

However, the value of this undefined additional support can to some extent be offset by the voluntary work received by the Museum Trust.

University Museums

1.332 Universities are similar to local authorities in that they are conglomerate

organisations, often with the museums they operate being perceived as at the fringe of their core business. Yet there has been no parallel movement of university museums to museum trusts. The reasons for this include:

a) universities are governed on a shared, collegiate basis that is very

different to the directive nature of local government; b) universities are charitable bodies,45 which provides the museums they

operate with all the fiscal and benefits to donors associated with charities;

c) many university museums are subject to special trusts that ring-fence their resources within the university, and sometimes they have their own trustee or scrutiny arrangements providing advocacy and/or a measure of direction outside of the university administration;

c) funding through the Arts and Humanities Research Council is limited to

supporting universities, and it is not clear how far an arm’s length body beyond the university’s control would continue to be eligible for this support; and

d) the beneficial VAT treatment of university museums, which aligns them with

the National museums in being able to recover VAT on expenditure incurred in providing free admission, would be lost.

1.333 The recent review of university museums focuses on how university museums

can best fit into their executive structures, 46 and this seems entirely the most appropriate approach. Here, opportunities lie in reinforcing relationships between universities and their museums, rather than making them appear less relevant to the university’s mission, and perhaps this is where effort and support is best deployed.


45 Charities Act 1993 s 3(5)(a), sch 2 46 University Museums Group (2004), 30 - 31

CHAPTER 1.4: THE DEVOLVED MUSEUMS 1.401 This Chapter provides summary descriptions of each of the local authorities

that have devolved some or all of their museum services to museum trusts, excepting those that are in transition at the time of preparing this report. Not all museums are given similar depth of consideration; the aim is primarily to reflect the variety of current arrangements, and provide the evidence for the discussion in Chapter 5.

1.402 In most cases, the narrative on each museum is preceded by a table that

presents (where it is available) the following key information47:

the date of the museum’s foundation (where there is a group of museums the date given is that of the foundation of the oldest element);

the date the local authority devolved management to the museum trust;

the number of sites devolved from the local authority to which there is

public access;

whether there is a , and if so the duration of the current agreement;

the current number of trustees, with the proportion that is nominated, and the proportion nominated by the core-funding local authority;

whether the trustees have established management and/or audit

committees;

whether the museum trust is responsible for Designated collections under MLA’s scheme to identify, based on their quality and significance, the pre-eminent collections of national and international importance held in England's non-National museums, libraries and archives;

any subsidiary trading companies that carry out trading activities that are

not permissible under the museum trust’s powers;

staff numbers and staff costs as a proportion of gross expenditure;

the museum trust’s pension arrangements, whether the Local Government Pension Scheme48, any other equivalent defined benefit scheme, or a Personal Pension scheme/contribution to personal pension;

the museum trust’s gross income49 for the most recent year for which

accounts are available, showing the following percentages:


47 Where no information it is shown as ‘unpublished’ ‘nk’ (not known) or not applicable (‘na’)

as is most appropriate 48 para 1.563 and following 49 It should be noted that this will include income relating both to capital and revenue. Where

the gross incoming resources for the year include a substantial element relating to a capital project, the main text indicates recent revenue, and sources of income.

o income earned from admission charges and/or trading (including corporate hires), inclusive both of that from the museum and Gift Aid contributions from any trading subsidiary

o income provided by the core funder under the

o other income from public funds (including any supplementary

grants from the core funder), identifying in particular those from HLF and Renaissance in the Regions (including the Designated Challenge Fund)

o income from non public funds (eg charitable foundations and

trusts, commercial sources and private giving);

the net profit generated from trading activities;

the museum trust’s Net Current Assets for the past five years, as a measure of its liquidity;

its Total Assets for the past five years, identified as Restricted Funds (ie

those that are held for specific purposes and are not part of the general funds of the museum trust), and Unrestricted Funds (ie those where the trustees have total discretion over their expenditure); and

visitor numbers for the past five years (whether from the museums’ own annual reports, annual Survey of Visits to Tourist Attractions undertaken for the national tourist boards of England and Wales, or, when it provides reliable dated numbers, the Museums Association’s annual Museums Yearbook.50

1.403 Where useful comparative performance information derived from local

authority performance indicators and other sources is available, it is reported. Data on resident satisfaction surveys derive from Best Value Performance Indicators which every local authority is required to undertake at least once in every three years. Best Value indicators are only used where a council has devolved its whole museum services to one or more trusts.

1.404 The Nearest Neighbours model of the Chartered Institute of Public Finance

and Accountancy is used in cases where it is possible to establish meaningful comparators. The nearest neighbours are those with the most similar characteristics across sixteen indicators relating to population, demography, area, deprivation, cultural diversity, and commercial and tourism character.

1.405 The distribution of devolved museums is broadly similar across Wales and

the English regions, with each region having an average of three devolved museums. Yorkshire and the Humber has the most (five), and the East


50 Some series of visit numbers relate to financial years, others to calendar years. In the

former case the year given is that in which the financial year ends; in the latter, the most recent entry will be for 2004.

Midlands and North-East the least, with one each. For practical purposes, the descriptions of the devolved museums that follow are presented in alphabetical order of the public authority that initiated the devolution. Exhibit 1.1 has already listed the 24 devolved museums chronologically by date of devolution. Exhibit 1.4.1 lists those same museums by gross income, from the latest accounts available. While this includes grants related to capital works as well as revenue income, so should not be relied on as a measure of scale, it does provide a quantum for the financial activity of devolved museums that totals around £45 million.

Exhibit 1.4.1: Devolved Museums by Income

Gross Income £m

Paragraphs

£9.436 Sheffeld Galleries & Museums Trust 1.4049£5.032 Birmingham: Thinktank 1.426£4.468 ILEA: Horniman Museum 1.4019£4.151 York Museums Trust 1.4090£2.922 Dudley: Black Country Museum 1.491£2.387 ILEA: Geffrye Museum 1.4019£2.125 Braintree Museum 1.436£1.951 Durham: Bowes Museum 1.499£1.537 Sheffield Industrial Museums Trust 1.4037£1.477 Chichester: Pallant House 1.450£1.197 Bexley Heritage Trust 1.413£0.985 Coventry Transport Museum 1.463£0.933 St Helens: World of Glass 1.4066£0.862 Southwark: South London Gallery 1.4061£0.483 Denbighshire: Bodelwyddan Castle 1.475£0.452 Kent: Museum of Kent Life 1.4027£0.232 Torfaen Museum Trust 1.4069£0.097 Bolton: Smithills Hall 1.430£0.095 Allerdale: Helena Thompson Museum 1.406£0.089 West Dorset: Bridport Museum 1.4083£0.076 Dacorum Heritage Trust 1.469£0.049 Waverley: Godalming Museum 1.4074£0.022 Cheltenham: Holst Birthplace 1.444

not available Harrow: Headstone Manor 1.4015 Allerdale Borough Council: Helena Thompson Museum, Workington51

1.406 No statistical information is provided due to the recent date of devolution,

which means that no annual accounts are available.


51 Information from Allerdale Borough Council

1.407 The Museum building and collections were bequeathed to the people of Workington by Miss Helena Thompson, a local philanthropist, in 1940. The Grade II* Listed 18th century house that provides the museum’s home was formerly the residence of the Steward of the Curwen Estate, and includes displays of ceramics, silver, glass, and Georgian furniture, as well as the social and industrial history of Workington and the surrounding area. In recent years it has had around 3,000 visits annually.

1.408 On local government reorganisation in 1974 the Museum came under the

control of the Allerdale Borough Council, which also operates the Maryport Maritime Museum and (as sole trustee of a charitable trust) Keswick Museum and Art Gallery in Keswick.

1.409 Following the deletion of the post of Curator by the Council in 1995, the

Helena Thompson Museum’s curatorial functions were discharged by volunteers, under the supervision of the Council’s Heritage and Arts Manager. In 2002, following a strategic review part-funded by the North West Museums Service, the Council decided to seek to outsource the Museum, or to consider closure should this not be achievable. The Workington Heritage Group (WHG), which grew out of the town’s Civic Society, successfully lobbied the Council to sustain museum provision in Workington.

1.410 These efforts, combined with a change in the Council’s political composition

after elections in 2003, led to the Council devolving the Museum’s management (including its buildings and contents) to the Group (which had been incorporated as a company limited by guarantee) in April 2005. The freehold of the buildings and title to the collection remained with the Council. It was proposed to second the attending/warding staff to the WHG, but in the event the WHG felt they were not required and they were consequently declared redundant by the Council.

1.411 The relationship between Council and Group was secured in the first

instance by a formal exchange of letters, which was followed by a management agreement based on that used by Bolton MBC for Smithills Hall52. The main elements of the Agreement are:

a) a licence from the Council to WHG to use the building; b) a loan agreement from the Council to WHG regarding the museum

collections; c) a requirement that WHG manage the site and museum including

providing sufficient staff and volunteers for opening the Museum at specified hours, and abiding by specifications for cleaning and emergency procedures;


52 see para 1.430 and following

d) the Council to insure buildings and collections, rechargeable to WHG, and to maintain the buildings; WHG to have the option to undertake additional grounds maintenance tasks.

e) WHG to provide performance information (principally that required for

national Best Value Performance Indicators; f) permission for WHG to use the premises for specified commercial

purposes;

g) an obligation for the Council to pay WHG an annual grant, payable quarterly, and reviewed annually in advance;

h) an indefinite term, subject to termination (other than by mutual consent)

only on default of the terms of the Agreement by either party;

i) the creation of a consultative group including four representatives of each party to meet no less than quarterly to consult, liaise and resolve any matters relating to the Agreement; and

j) a default procedure to the Council’s benefit which gives it some powers of

direction over the WHG where it believes the group is in default of the terms of the Agreement in respect of site management.

1.412 The Council currently provides an annual grant of around £30,000 to the

Group. The Group has declared its ambition to relocate the Museum to Workington Hall - a ruined Grade I listed manor house situated on the eastern edge of the town, which largely dates from the late 18th century, but incorporates a 14th century pele tower. To this end a range of partners, including the local regeneration company and Cumbria County Council, are funding a three-phase study to assess the feasibility of this ambition.

Bexley London Borough: Bexley Museum Trust53

1.413 Exhibit 1.4.2 provides key statistical information on Bexley Heritage Trust.

Exhibit 1.4.2: Bexley Museum: Key Statistical Information Date of foundation 1925 Date of Devolution 2000 No of sites 2 Funding Agreement 5 yrs Incoming Resources £1.197m No of Trustees 12% of Inc Resources • No. nominated 2• Earned income 14 • No. nominated by core funder 2• Core Grant 75 • Management committee Yes• Public Funds 8 • Audit Committee No• Other Non-Public Funds 2


53 Information from Bexley Heritage Trust; Annual Reports & Financial Statements 2000 -

2005

• HLF funding 0 No of staff 26• Renaissance 0 • Costs % expenditure 27 Trading Subsidiary Yes Pension Scheme: • Net Profit Not

available • Local Government Pension

Scheme Yes

• Defined Benefit/Contribution NoDesignated Collections No • Personal Pension No 2001 2002 2003 2004 2005 Net Current Assets (£) 46,158 148,708 293,229 447,346 351,871 Total Assets (£) 47,318 152,013 297,873 480,527 488,068 • Restricted 9,316 10,306 29,503 54,252 • Unrestricted 47,318 142,697 287,567 451,024 433,816 Visitor Numbers 55,000 68,000 85,000 83,872 108,740

* 2002/3; Latest accounts available to 31 March 2005

1.414 Bexley Museum has been located at New Hall, Bexley since 1972, and brings

together the collections of museums provided by some of the area’s pre-1965 local authorities. They are primarily of local significance, but are housed in a Grade I Listed Tudor mansion in extensive landscaped gardens.

1.415 During the 1990s, when the Museum was operated as part of the Council’s

Leisure Services, the Borough Council regarded New Hall as an expensive, under-performing asset. The Museum had remained unchanged since 1972, and was tired and in need of renewal,. A series of inconclusive reviews had looked at the building’s potential for residential use, or for development as a hotel. These moves were resisted by the local community, which sought the retention of public access. There was a strong local feeling that something needed to be done, but no consensus as to what this might be.

1.416 To cut through this impasse the Council’s then Director of Education explored

the development of a museum trust as the way of meeting the Council’s objectives for the site. The Sussex Archaeological Trust was examined as a potential model and (notwithstanding the scepticism of some Council members) the proposal was taken forward.

1.417 The Leader of the Council solicited Sir Bob Scott, the cultural entrepreneur

who had spearheaded the successful bids for the 2002 Commonwealth Games in Manchester and the 2008 Capital of Culture bid for Liverpool, as chair-designate of the museum trust. By June 2000 a shadow board had been assembled, with some of its members recruited through open competition, while others were invited to join. The Bexley Heritage Trust (BHT) was established in July 2000, and took over the management of Hall Place in the following October. A wholly-owned trading subsidiary (Bexley Heritage (Trading) Ltd) was incorporated in April 2002.

1.418 BHT’s strategic objectives, as set out in its most recent Business Plan, are to:


develop Hall Place and Danson House54 as high quality, economically-viable heritage attractions;

improve access to its heritage assets to both local people and visitors

and through ‘marketing, education, training and interpretation combat social and economic inclusion; and

ensure that the Trust’s resources and services are managed to the highest levels possible.

1.419 BHT’s initial five-year Funding Agreement with the Council solely related to

the running of the Hall and provision of the Borough’s museum service. In 2001 it was extended to include the management of the Hall’s gardens and 65-hectare estate, integrating its management with that of the historic house and reversing the previous disjointed arrangement which saw site management distributed over several different council functions. BHT also operates the Borough’s tourist information centre at Hall Place.

1.420 The Trust’s initial Agreement ran to March 2006, and saw grant payable

indexed annually from a base starting point. The grounds maintenance element was treated as a separate management contract outside of the Funding Agreement, with the Trust taking over the contract formerly delivered by the Council’s direct service organisation, so that, for practical purposes, the additional income received by BHT was ring-fenced and restricted to those activities. A new five-year Agreement with the Council, with similar terms and conditions to the first, has been agreed.

1.421 Besides its work at New Hall, BHT, in partnership with English Heritage, has

restored Danson House, which was officially opened by HM The Queen on 26 July 2005, and subsequently awarded the Georgian Group National Award for the Best Restoration of a Country House at Risk. BHT leases the property from the Council on a thirty-year peppercorn basis, and concessions on maintenance liability until 2009. English Heritage provides the Trust with a management grant of £50,000 pa. BHT is also a signatory partner in the restoration of the adjacent landscape, to which the Heritage Lottery Fund will be contributing. The preview season prior to The Queen’s visit brought in 10,000 visits in addition to those at New Hall.

1.422 The Trust also seeks close collaborations with other heritage operators in

Bexley, provides curatorial advice to the Erith Museum, and has offered educational and other support to the important Grade I Listed Crossness Pumping Engines near Thamesmead.

1.423 In its first five years BHT also has also achieved:

an increase in its turnover from £199,116 in 2001/2 to £1.197m in 2004/5;

growth in earned income from around £7,000 in the last year of Council operation to £317,500 in 2004/5;


54 para 1.421 below

an increase in visitor numbers from 40,000 in the last year of Council

operation to around 108,000 users in 2004/5;

growing participation in its schools programmes from 230 children in 2000 to over 6,000 in 2005, winning a Sandford Award for Heritage Education in 2003;

building on the Council’s past successes, the Green Flag Award (the

national standard for parks and green spaces in England and Wales, managed by The Civic Trust on behalf of the Office of the Deputy Prime Minister) for eight years – one of only six places to do so;

a £1.9 million contribution from HLF towards a £5.4 million scheme that

will refurbish Hall Place, provide new educational spaces and enhance parking arrangements; and

recruitment and training of more than 100 volunteers, providing direct

opportunities for involvement in the local heritage.

1.424 Residents’ satisfaction with museum services in Bexley was 32% in 2003/4, compared with a national average of 42%, with a top quartile above 50%. However, Bexley performed better than comparator Outer London Boroughs, and was ranked twelfth (of 33) London councils.

1.425 Exhibit 1.4.3 compares Bexley Council’s key performance information with that of its neighbours:

Exhibit 1.4.3: Bexley Borough Compared with Nearest Neighbours Description Bexley Redbridge Sutton Enfield Waltham

Forest Average

Distance 0 0.064 0.104 0.128 0.166 Number of visits 85,000 19,000 19,000 10,277 43,285 35,312 Number of visits in school groups

4,200 2,802 2,849 579 4,403 2,967

Net Expenditure £0.464 m £0.192 m £0.157 m £0.276 m £0.421 m £0.302 m Net Expenditure per head of population

£2.12 £0.80 £0.88 £1.01 £1.93 £1.35

Source: CIPFA Annual Leisure Estimates 2003/4; ODPM BVPI 170b

Birmingham City Council: Thinktank55

1.426 Exhibit 1.4.4 provides key statistical information on Thinktank Trust.


55 Information from Thinktank Trust and Annual Report and Financial Statements 2001- 2005

Exhibit 1.4.4: Thinktank: Key Statistical Information

Date of foundation 1986 Date of Devolution 1997 No of sites 1 Funding Agreement 5 yrs Incoming Resources £5.032m Max No of Trustees 15% of Inc Resources • No. nominated 4• Earned income 33 • No. nominated by core funder 2• Core Grant 62 • Management committee No• Other Public Funds 2 • Audit Committee Yes• Other Non-Public Funds 1 • HLF funding 0 No of staff 73• Renaissance 0 • Costs % expenditure 26 Trading Subsidiary Yes Pension Scheme: • Net Profit 1% • Local Government Pension

Scheme* Yes

• Defined Benefit/Contribution YesDesignated Collections Yes • Personal Pension Yes 2001 2002 2003 2004 2005 Net Current Assets (£m) 0.175 (0.396) (1.038) (1.336) (1.140) Total Assets (£m) 996 2.912 2.173 1.283 939 • Restricted 821 3.270 2.904 2.753 2.178 • Unrestricted 175 (358) (731) (1.470) (1.239) Visitor Numbers 64,810 190,000 unpublished 185,000

* Staff seconded from Birmingham City Council only Latest accounts available to 31 March 2005 1.427 Birmingham’s Museum of Science & Industry, which had been at Newhall

Street since 1950, closed in 1997. Following a fallow period, it was replaced by a new combined science centre and museum development -Thinktank - which was located as part of Millennium Point, a landmark building in which the Council was a partner, designed to lead the regeneration of the Digbeth, a community on the fringe of the city centre. Thinktank opened in September 2001.

1.428 Some, but not all, of the Science & Industry Museum’s collections were

transferred to Thinktank under a loan agreement, and some (mainly technical) staff previously employed in the City Museums were seconded to it on a permanent basis. A five-year with the Council provides revenue on an agreed profile with some uplift to reflect RPI. Trust executives report on performance on a quarterly basis to an ‘advisory group’ of (cross-party) council elected members.

1.429 The City Council is a member of the Thinktank Trust, and has the right to

appoint two members to its eleven-strong board and to appoint its chair, with the consequence that person is likely to be replaced when there is a change in the Council’s political control. Other bodies nominating to the board include


the University of Birmingham and Chamber of Commerce. Thinktank’s senior management is shared with the Millennium Point development.

Bolton Metropolitan Borough Council: Smithills Hall56

1.430 Exhibit 1.4.5 provides key statistical information on Smithills Hall & Park Trust.

Exhibit 1.4.5: Smithills Hall: Key Statistical Information

Date of foundation 1960 Date of Devolution 2000 No of sites 1 Funding Agreement Annual Incoming Resources £0.097m Max No of Trustees 10% of Inc Resources • No. nominated 2• Earned income 62 • No. nominated by core funder 2• Core Grant 38 • Management committee No• Other Public Funds 0 • Audit Committee No• Other Non-Public Funds 0 • HLF funding 0 No of staff 3• Renaissance 0 • Costs % expenditure 48 Trading Subsidiary No Pension Scheme: • Net Profit • Local Government Pension

Scheme No

• Defined Benefit/Contribution NoDesignated Collections No • Personal Pension No

2000 2002 2003 2004 2005 Net Current Assets (£) 8,313 6,313 29,292 32,500 35,926 Total Assets (£) 8,313 7,201 31,230 38,519 41,533 • Restricted 0 0 0 0 0 • Unrestricted 8,313 7,201 31,230 38,519 41,513 Visitor Numbers 6,538 8,071 10,272 11,974

Latest accounts available to 31 March 2005 1.431 Following a £1.8 million restoration in 1999, which had ERDF support,

management of Smithills Hall was devolved from Bolton’s Museum Service (which had operated it since 1960) to the Smithills Hall and Park Trust. The devolution, spearheaded by the Metropolitan Borough Council’s then Leader, was a response to local community activists feeling the site would be better run at arm’s-length from the council.

1.432 The museum trust’s activities were limited to the Hall, with the Council

retaining responsibility for the surrounding gardens and estate. The transition for Council to Trust was phased, with the trust initially operating the Hall’s shop and café during 2000/1, and from 1 April 2001 taking over the operation and marketing of the museum.


56 Information from Bolton Metropolitan Borough Council; Smithills Hall & Park Trust Annual

Reports & Financial Statements 2000 - 5

1.433 The relationship between the Council and Trust was defined in an annual Service Level Agreement whereby, in return for its annual grant (£37,000 in 2003/4), the Trust was required to use its best endeavours to achieve performance targets relating to user levels, schools and educational use, though there was no requirement to meet external standards, such as Museums Registration. The collections in the Hall were loaned to the trust through a separate agreement.

1.434 The Council grant represented approximately 40% of the Trust’s incoming

resources. The balance came through admissions, tours, education activities and events, as well as the proceeds of a small shop. The Trust relied heavily on the practical assistance of members of the Hall’s Friends group, and had only three employees.

1.435 For much of the time that the Trust operated the Hall, its relationship with the

Council was strained. The Council changed its political leadership following the 2004 local elections. In November 2004 the Council resolved not to renew the Service Level Agreement, and to return the Hall to its direct management.

Braintree District Council: Braintree District Museum57

1.436 Exhibit 1.4.6 provides key statistical information on Braintree District Museum:

Exhibit 1.4.6: Braintree District Museum: Key Statistical Information Date of foundation 1982 Date of Devolution 1990 No of sites 2 Funding Agreement 15 years Incoming Resources £2.125 No of Trustees 12% of Turnover • No. nominated 3• Earned income 3 • No. nominated by core funder 3• Core Grant 4 • Management committee No• Other Public Funds 1 • Audit Committee No• Non-Public Funds * • HLF funding 91 No of staff • Renaissance 0 • Costs % expenditure

not available

Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension

Scheme not

applicable • Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 45,789 (39,676) 206,960 (34,275) Total Assets (£) 137,379 480,309 827,707 2,812,617 • Restricted 0 329,726 721,895 105,812 • Unrestricted 137,379 130,583 105,812 2,706,805

not available


57 Information from Braintree District Council; Braintree Museum Trust’s Annual Reports and

Financial Statements 1996 - 2004

Visitor Numbers unavailable 33,713 36,359 35,795

* less than 1% Latest Accounts available to 31/12/2004 1.437 In addition to the Museum Trust’s revenue income of around £80,000 pa, the

Council provides annual grant support of £8,500, meets premises, supplies and services costs of around £36,000, £95,000 on staff salaries and associated overheads, and around £8,000 in central charges. Thus the museum’s total budget (net of capital or loan charges) is around £227,500, of which the Museum Trust’s direct activities have contributed around 35% during recent years

1.438 The move to create a museum in Braintree started in the 1930s.

Notwithstanding continued collecting over an extended period, difficulty in locating suitable sites for a museum building meant that it was not until 1989 that the Council appointed its first museum staff. Lacking museum facilities, their initial work was a series of community programmes that engaged local people with their heritage.

1.439 In the early 1990s a suitable building was identified, a former 19th century

school, which was the subject of covenants that required its use for educational purposes. When it became redundant, legal restrictions precluded the Essex County Council becoming its owner, either for its own use for the purpose of selling it on. The District Council began to think that a museum trust, with an educational purpose, would be capable both of acquiring and running the property. It had already worked with the newly-formed Braintree and Bocking Heritage Trust to establish an interpretation centre (with the financial help of the Carnegie United Kingdom Trust), so had some experience in this area, and recognised the potential of this form of organisation in raising funds from sources where the Council would be ineligible. Similar arrangements seemed appropriate to the museum service.

1.440 A steering committee of local organisations was set up to take the project

forward, with the Council recruiting trustees for what became the Braintree and District Museum and Study Centre Trust, which was constituted by Declaration of Trust (in 2005 a company limited by guarantee was created to take over this unincorporated body). Its relationship with the Council was established in a Joint Statement of Intent, which defined the respective objectives of both Council and Trust, and the practical implications of the arrangement. Its main terms were:

the museum trust to own the museum premises, and be responsible for its

maintenance, but the Council to meet the insurance costs;

the council to provide annual revenue funding to the Trust on the basis of annual bids made within the context of a service plan, agreed between the Council and the Trust, and to allow the Trust to bid for capital funding to the Council’s planned maintenance programme;


the Trust to receive all income from the Museum’s operation;

the Council to continue to own the collections which would be managed by the Trust, which would not collect in its own right;

staff normally to be employed by the Council on its terms and conditions

of service, with appointment panels to include Trust representation; and

the minutes of meetings of trustees to be sent to the Council for information.

1.441 This Statement of Intent was reviewed in 2000, after seven years of

successful operation, when it was endorsed for a further fifteen year period, subject to triennial reviews. Termination is on two years’ notice.

1.442 The Museum Trust is also a member of the Braintree Cultural Partnership

Board (together with the Council’s leisure trust and local Arts Council), which is linked to the Local Strategic Partnership and, through the Cultural Strategy, to the Council’s internal management.

1.443 Since the establishment of the Trust it has:

created Braintree’s museum, which opened in October 1993, financed by a package which included the acquisition of the site on behalf of the Trust after an exchange of land with the County Council funding, sponsorship from a public limited company, and funds raised from local and national sources;

become one of the first museums to achieve BS5750 (ISO9000), the

recognised standard for management systems and processes;

won the Interpret Britain Award for Outreach in 2000;

created, with HLF support, a new ‘learning for life’ centre, café and a large objects store, completed in 2003; and

acquired the threatened Warner Textile Archive, and converted a former

Silk Mill to house it – a £2.6 million, HLF-supported project.

Cheltenham Borough Council: Holst Birthplace Trust58

1.444 Exhibit 1.4.7 provides key statistical information on the Holst Birthplace Museum:

Exhibit 1.4.7: Holst Birthplace Museum: Key Statistical Information Date of foundation 1974 Date of Devolution 2000


58 Holst Birthplace Trust Annual Reports & Financial Statements 2000 - 2005

No of sites 1 Funding Agreement Five-year Incoming Resources £0.022 No of Trustees 8% of Turnover • No. nominated 0• Earned income 38 • No. nominated by core funder 0• Core Grant 36 • Management committee not known• Other Public Funds 4 • Audit Committee not known• Non-Public Funds 13 • HLF funding 0 No of staff 1• Renaissance 0 • Costs % expenditure 51 Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension

Scheme No

• Defined Benefit/Contribution NoDesignated Collections No • Personal Pension No

2001 2002 2003 2004 2005 Net Current Assets (£) 53,102 55,935 49,527 60,304 60,449 Total Assets (£) 202,395 205,555 202,413 216,935 224,098• Restricted 148,500 148,500 148,500 164,261 193,711• Unrestricted 53,895 57,055 53,913 52,674 30,387 Visitor Numbers 4,285 4,670 4,100 4,417

Latest accounts available to 31/03/2005 1.445 The museum was founded in 1974 by Gustav Holst’s daughter, Imogen Holst,

during centennial ceremonies for Holst's birth. It houses a number of mementoes, including the piano on which Holst composed The Planets, as well as pictures, books, some letters and manuscripts.

1.446 During the late 1990s the Council’s strategy was to reduce expenditure on its museum service by closure of branch museums, which were seen as expensive in terms of the benefits they generated. Thus, in 1999, the Council announced the closure of the Birthplace Museum, a decision that provoked opposition both from Cheltenham residents and music-lovers from the wider world. The Associated Newspapers group offered £20,000 to launch a campaign to keep the museum open.

1.447 In response, the Council agreed to transfer the Museum (including title to the property) to a charitable company established for that purpose, together with the funds of a special trust created when the Museum was first established. It also offered a tapering revenue grant for the first five years of the Trust’s operation, starting at £15,000, then reducing by equal amounts to a final instalment of £5,000. This compared to the Council’s budgeted net expenditure for 1998/9 of £32,000 + £43,900 in support costs.59 The Council retained ownership of the collections at the Museum, which were loaned as part of a service level agreement with the charity.


59 Cheltenham Borough Council Revenue & Capital Budget 1998/99, 323

1.448 The Museum’s board of trustees comprises of up to nine members, who meet monthly, with the head of Cheltenham’s museums service able to attend as an observer. A paid curator carries out the day-to-day management, and the site is operated by 50 volunteers.

1.449 Exhibit 1.4.8 shows that as a consequence of the devolution both operating

costs and the public subsidy for each visit has reduced substantially. However, it is also the case that recent years have seen increasing operating deficits which have placed it in a precarious financial position and may be a caution for the long-term sustainability of the arrangement. As a reflection of these financial difficulties, the Council increased the final instalment of the tapering grant from £5,000 to £8,000, and extending its revenue support to £3,000 pa on recurring basis. In addition, it has committed £10,000 to building repairs at the Museum in 2006/7.

Exhibit 1.4.8: Holst Birthplace Pattern of Expenditure 1993 - 2003

* = Actual; # = November 1999 – March 2001 Sources: Cheltenham Borough Council Revenue & Capital Budget 1998/99; Holst Birthplace Trust Annual Reports & Financial Statements

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

93/94* 94/95* 95/96 96/97* 97/98 98/99 99/01*# 01/02* 02/03* 03/04* 04/05*

Cost to Council (£'000s) Subsidy per vsiit (£s)

Chichester District Council – Pallant House Art Gallery60

1.450 Exhibit 1.4.9 provides key statistical information on the Pallant House Art

Gallery at Chichester

Exhibit 1.4.9: Pallant House Gallery: Key Statistical Information Date of foundation 1979 Date of Devolution 1985 No of sites 1 Funding Agreement 10 Year*


60 Annual Reports & Financial Statements 2001 – 2005; Chichester District Council Review of Arts Facilities (2004); MGC (1992)

Incoming Resources £1.477 m No of Trustees 15% of Turnover • No. nominated 15• Earned income # • No. nominated by core funder 8• Core Grant 12% • Management committee Yes• Other Public Funds • Audit Committee Not known• Non-Public Funds • HLF funding

not

available No of staff 14• Renaissance 0 • Costs % expenditure 67 Trading Subsidiary None Pension Scheme: • Net Profit • Local Government Pension

Scheme Yes

• Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 123,324 113,619 215,463 1,374,262 857,915 Total Assets (£) 879,608 1,162,551 1,837,545 4,248,535 5,337,225• Restricted 765,719 1,056,149 1,822,745 4,207,288 5,295,769• Unrestricted 113,889 106,402 15,070 41,247 41,456 Visitor Numbers 26,804 20,049 closed for development Aug 2003 –

Mar 2006

* currently extended by 3 years to 2007/2008 # less than 1% Latest accounts available to 31/03/2005

1.451 Pallant House is a late Queen Anne town house (Listed Grade I) owned by Chichester District Council, by whose predecessor it had been acquired in 1919. In 1977 Walter Hussey, a former Dean of Chichester Cathedral, left his personal collection (which included significant works of modern British art) to the City on the condition that it be shown as a furnished domestic setting within Pallant House, reflecting his view that there is no incongruity in setting the art of different periods side by side.

1.452 In 1979 the Council began a programme of building restoration, and in 1983

opened the Gallery to the public as part of the district museum service, managed by its curator. The Gallery’s Friends, founded in 1979, played a crucial role in the establishment of the Gallery during these early years, and have continued to be a strong support in raising funds for developing the Gallery and enhancing its collections (in recent years contributing around 25% of the Gallery’s income), as well as in providing (around 150) volunteers and linking it to its local community.

1.453 During the early years of the Gallery’s operation, some of the Friends

believed that it could be managed more effectively by a charitable trust and that this route would also be more attractive to other potential funders. After extensive discussions, the Council agreed with the Friends to constitute a charitable trust, initially with a seven-strong board of trustees, four nominated by the Council, three by the Friends. This independent trust took over the operation of the Gallery in 1985.


1.454 The charity was constituted by a Declaration of Trust – an unusual form for a museum of this size and scale, as being unincorporated it lacked its own legal personality and the liability of its members was unlimited. However, it did result in the Trust falling outside of the local authority controlled company regulations under Part V of the Local Government & Housing Act 1989, 61 thereby enabling Council nominees to remain in the majority during a period when the trend was in the other direction. In 1996 a Charity Commission Scheme introduced arrangements for the alteration of the Trust Deed, subject to certain controls. In 2004 a limited liability company was created to take over the assets, liabilities and operations of the unincorporated trust, but technical difficulties have delayed this transfer.

1.455 The framework for the relationship between the Council and the Gallery after

1985 included:

a 99-year peppercorn lease on the building, with the Trust responsible for the interior maintenance of Pallant House, while the Council retained responsibility for its exterior;

a loan agreement for the Hussey Collection and various other items in

Council ownership, which required the Gallery to maintain the Hussey Collection, the Council’s consent to be obtained for items to be displayed elsewhere than in the Gallery, and the Collection always to be credited as the Council’s property; and

an annual revenue , with limited obligations on the Gallery other than to

provide an annual report and Accounts, and provision for an annual grant of £55,000 to be increased annually by inflation.

1.456 These terms were embodied in a legally-binding ten-year (with the Council’s

annual grant linked to the Retail Price Index) that allowed the Trustees a period of financial stability, during which the Trust had undertaken to use its best endeavours to raise an endowment fund that would replace Council funding.

1.457 By 1995 it had become clear that without an extension to the building the

Trust could not achieve the level of exhibition and audience that would make the Gallery more attractive to the potential sources of endowment funding. The Council therefore agreed to a second ten-year period of grant funding with a base figure of £100,000 (a 15% uplift on that for the previous period), with the linkage to the Retail Price Index being continued. In 2004/05 the Council’s grant was £125,310, which represented 36% of the Gallery’s revenue income for that year.

1.458 Since its establishment the Trust has substantially enlarged the collection

(notably by the Wilson Collection of modern art - part permanent gift through the National Art Collections Fund and part extended loan) - and developed education and outreach services (including travelling exhibitions to libraries


61 see paras 2.450 – 2.454

and community centres in West Sussex and Hampshire). The Gallery’s sub-regional significance is recognised in revenue support from Arts Council England, which in 2005/6 is providing a grant of £45,000 (which rises to £47,509 by 2007/8) for the planning, development and presentation of a range of contemporary visual arts exhibitions with an associated education and outreach programme. In recent years annual visit numbers to the Gallery itself have averaged around 23,000.

1.459 In January 2002 the Gallery was awarded a grant of £3.850 million by the

Heritage Lottery Fund (HLF) towards the cost of an £8.889 million scheme, designed by Long & Kentish in association with Colin St John Wilson, to refurbish and extend the House, improve its entrance arrangements, increase and improve display space for the collections and temporary exhibitions, and provide a Shop, Café, Learning Space and Reading Room, with space for the Gallery’s works on paper collection. The balance of funding comes from a wide range of public and private sector funds, including a £250,000 contribution from the City Council. The Gallery is expected to re-open in Spring 2006.

1.460 The Council used the need to amend the trust’s lease to meet HLF’s

requirements as an opportunity to vary its provisions in other ways, including the introduction of a rent review (first in 2005 and then recurring) that enable the Council to reconsider whether it wishes to grant concessionary rentals on any part of the property. It also leased an additional plot of land to accommodate the extension on similar terms to the remainder of the property.

1.461 A recent review by the Council agreed that the current level of revenue

support should continue until 2007-08. The Council proposes to make a further decision on continued funding in Autumn 2007, by which time the Gallery’s financial position should have become clearer following eighteen months’ operation, and whether (what the Council believes are ambitious) projections in the Gallery’s business plan are realised.

1.462 The Council directly operates Chichester Museum (with a branch at the

Guildhall), with a net expenditure (2004/5) of £397,000. This is subject to a £4.5 million redevelopment scheme, which will see the relocation of the museum to a new retail development in the city centre.

Coventry City Council: Coventry Transport Museum (Museum of

British Road Transport Limited)62

1.463 Exhibit 1.4.10 provides key statistical information on the Coventry Transport

Museum:


62 Museum of British Road Transport Limited Annual Accounts & Financial Statements 2003 -

2005

Exhibit 1.4.10: Coventry Transport Museum: Key Statistical Information Date of foundation 1960 Date of Devolution 2003 No of sites 1 Funding Agreement Annual Incoming Resources £0.985m No of Trustees 13% of Turnover • No. nominated 2• Earned income 11 • No. nominated by core funder 2• Core Grant 82 • Management committee Not known• Other Public Funds 0 • Audit Committee Not known• Non-Public Funds 1 • HLF funding No of staff 34• Renaissance • Costs % expenditure 68 Trading Subsidiary Yes Pension Scheme: • Net Profit • Local Government Pension

Scheme Yes

• Defined Benefit/Contribution NoDesignated Collections Yes • Personal Pension No

2001 2002 2003 2004 2005 Net Current Assets (£) 221,373 214,512 Total Assets (£) 244,040 229,846• Restricted 130,024 132,033• Unrestricted 114,016 97,813 Visitor Numbers 121,213 100,359 96,635 109,569 275,001

Latest accounts available to 31/03/2005 1.464 The Coventry Transport Museum (formerly known as the Museum of British

Road Transport) was established in 1980. Although the City Council had a long-established museum service, the decision was taken that this new museum should operate separately, and should (unlike the city’s other council-owned museums and galleries) charge for admission. This reflected the intention that the Museum would be a tourist destination that would attract a substantial response from outside the city. A charitable trust (the Museum of British Road Transport (Coventry) Trust) was established in 1989 as a fundraising vehicle.

1.465 In 1996/7 Coventry City Council received funding from the Millennium

Commission for a ‘Landmark Project’ which included a new frontage and entrance to the Museum (opened in 2004); a subsequent ‘Completion Project’ funded by the European Regional Development Fund, the Heritage Lottery Fund and the MLA’s Designation Challenge Fund has enabled a programme of gallery redevelopments, scheduled for completion in 2006. The total redevelopment package will have cost in the order of £11 million.

1.466 In 2003 responsibility for the Museum’s operation of the Museum moved from

the Council to the Museum of British Road Transport (Coventry) Limited, a company limited by guarantee (but not a registered charity), to which the staff, working assets and Museum buildings of the Museum were transferred. The


collections remained in the ownership of the City Council. The Trust proposes to apply for charitable status in 2006.

1.467 The Museum’s operation is the subject of a Contract for Services with the City

Council, for which it received £812,864 in its first year of operation. The Contract included the requirement that the company should plan to earn £50,000 from operating activities in 2004/5, rising to £100,000 by 2008. The Contract’s exact terms and conditions were not finalised before the transfer, and there is an outstanding dispute over the extent to which the Council’s funding should reflect the costs of administrative overheads previously met by the Council.

1.468 The City Council also manages a directly-delivered museum service which,

as part of a redevelopment package to which HLF is contributing, it is considering devolving to a museum trust. As part of this review, the Council is considering whether or not there would be benefits in amalgamating the governance/and or operations of all the museums it funds.

Dacorum Borough Council: Dacorum Heritage Trust63

1.469 Exhibit 1.4.11 provides key statistical information on the Dacorum Heritage

Trust (DHT):

Exhibit 1.4.11: Dacorum Heritage Trust: Key Statistical Information Date of foundation 1979 Date of Devolution 1993 No of sites 1 Funding Agreement 3 years Incoming Resources* £0.076m No of Trustees 10% of Turnover* • No. nominated 2• Earned income 1% • No. nominated by core funder 2• Core Grant 90% • Management committee No• Other Public Funds 7% • Audit Committee No• Non-Public Funds 2% • HLF funding 0 No of staff 4• Renaissance 0 • Costs % expenditure 73 Trading Subsidiary No Pension Scheme: • Net Profit • Local Government Pension

Scheme No

• Defined Benefit/Contribution YesDesignated Collections No • Personal Pension No

2001 2002 2003 2004 2005 Net Current Assets (£) 7,801 20,772 21,399 28,582 35,922 Total Assets (£) 11,985 24,527 25,060 31,107 37,156• Restricted 3,200 8,517 13,382 17,293 17,293• Unrestricted 8,785 16,010 11,678 13,814 19,863


63 Information from Dacorum Heritage Trust; Annual Reports & Accounts 1996 - 2005

Visitor Numbers not appropriate

Latest accounts available to 31/03/2005

1.470 Dacorum district (Hertfordshire) includes the towns of Hemel Hempstead, Berkhamsted, Tring and Kings Langley, in addition to numerous villages.

1.471 In 1979 the Dacorum Museums Advisory Committee (DMAC) was formed by local people to address the problem of a 'heritage drain' to other museums in Hertfordshire and beyond. Dacorum Borough Council appointed a Heritage Officer in 1990. In 1993 DMAC became a charitable company – The Dacorum Heritage Trust – and took over the Council’s museum responsibilities. The following year, with Museums and Galleries Commission funding, the Council specially converted a former fire station in Berkhamsted as a Museum Store, which it leased to the Trust on non-commercial terms.

1.472 The Museum Store, which holds the collections of a number of local councils and societies in the district, is open by appointment from Monday to Friday for research and enquiries, and there are regular tours. Museum Registration has been achieved, with seven display units around the Borough (four in libraries, two in civic centres and one in a shopping centre) which receive changing exhibits substituting for a permanent museum building. One larger, touring exhibition is also produced each year. DHT also provides publishes books on local history, provides object loan boxes and resource packs (and arranges object handling sessions) for schools and has a Friends organisation.

1.473 The Trust employs a full-time, professional curator, with an assistant and two part-time administration assistants, supported by a large group of volunteers, of whom sixteen make a weekly commitment of time that is the equivalent of one other full-time member of staff. The Trust continues to be funded by Dacorum Borough Council. In 2004/5 the Council considered withdrawing its support, but in response to public pressure it agreed to continue to support the Trust, though reducing its £69,000 grant by 10%, while agreeing to maintain that level of funding for a three-year period.

1.474 There is a Service Level Agreement between the Council and the Trust, which specifies targets across all the Trust’s activities, and requires it to report quarterly on how far these have been achieved.

Denbighshire County Council: Bodelwyddan Castle64

1.475 Exhibit 1.4.12 provides key statistical information on the Bodelwyddan Castle:

Exhibit 1.4.12: Bodelwyddan Castle: Key Statistical Information Date of foundation 1980 Date of Devolution 1994 No of sites 1 Funding Agreement Annual


64 Sources: Bodelwyddan Castle Trust; Davies ( 1994); Annual Reports & Financial Statements 1994 -

2004

Incoming Resources £0.483 No of Trustees 13% of Turnover • No. nominated 4• Earned income 33 • No. nominated by core funder 2• Core Grant 40 • Management committee No• Other Public Funds 11 • Audit Committee No• Non-Public Funds 0 • HLF funding 0 No of staff 22• Renaissance Na • Costs % expenditure 55 Trading Subsidiary Yes Pension Scheme: • % Net Profit 38% • Local Government Pension Scheme Yes • Defined Benefit/Contribution NoDesignated Collections na • Personal Pension No

2001 2002 2003 2004 2005 Net Current Assets (£) 254,635 262,006 110,542 188,153 362,146 Total Assets (£) 231,559 280,850 336,882 364,708 394,773• Restricted 0 0 0 0 0• Unrestricted 231,559 280,850 336,882 364,708 394,773 Visitor Numbers 48,600 48,047 37,590 35,064

Latest accounts available to 31/03/2005 1.476 Bodelwyddan Castle, near Rhyl in North Wales, was purchased by Clwyd

County Council in 1980 with the intention of using it to stimulate the local tourism industry, and hence increase employment. The Grade II* Listed Building, with its formal gardens and estate totalling 99 hectares – the former home of the Williams family - took its present form between 1830 and 1852, though for much of its history it had uses other than as a family seat.

1.477 The County Council’s first phase opened in 1988 as an admission-charging

heritage attraction. It incorporated a branch of the National Portrait Gallery (NPG) that showed aspects of its Victorian collections, alongside loans of furniture and other decorative arts from the Victoria and & Albert Museum and Royal Academy. There was also provision for temporary exhibitions and interactive galleries.

1.478 The development proved popular and acclaimed: it won tourism, architecture

and horticulture awards, and was National Heritage’s Museum of the Year for 1989. However, despite these achievements and around 100,000 visits each year, the early 1990s found it in a vulnerable position. The co-incidence of emerging financial difficulties for the County Council with a new administration at County Hall led to pressure on all non-statutory services. With a substantial capital debt to be serviced (£400k pa), high operating costs (around £800k pa), and a continuing need for investment (both to refurbish parts of the site that remained semi-derelict and to retain the visitor appeal of those areas that had been developed), closure and disposal was an attractive option.

1.479 Indeed, had it not been for the requirement to repay substantial capital grants

that had been received by the Council, this would probably have been the


outcome. However, the need to reduce expenditure, avoid grant repayments and satisfy an emerging public concern about future access to the Castle, led to the County Council to seek a solution that would both relieve its financial pressures and retain core public provision. Following several false starts, the good offices of the Wales Tourist Board led to a developer – Rank Holidays and Hotels Developments Limited – coming forward to develop the site for their Warner Holidays brand, based on high-spend, all-inclusive holidays for older people. Agreement was reached in 1993, with the developer being granted a 125 year lease for an area of the site that would enable the construction of a 188-bedroom hotel with associated leisure facilities. The plans incorporated a mix of refurbishment and new-build in the style of the Castle, broadly within the footprint of existing redundant buildings.

1.480 Parallel to the commercial development, plans were developed for new

governance arrangements for the Castle itself and its museum content (including the NPG outstation), which would complement the commercial operation of the hotel. A museum trust was proposed, which would take a lease for the same period as the commercial partner, on a peppercorn rental for such time as the museum remained a not-for-profit organisation. It would be the beneficiary of the lease rental from the hotel, and under a separate ten-year agreement, the hotel purchased tickets for resale to its guests. In return, the hotel would have a retail monopoly, precluding the Museum from selling a range of items (food, drinks, soft drinks, ice creams, confectionery) though a local agreement with the hotel management enabled the Museum to carry out limited retail operations for its visitors.

1.481 The Trust, created as a company limited by guarantee, included a board of

fifteen members, including nominees from the Council (including the chair), the hotel operator, and the Castle’s Friends organisation. Other members were recruited by the Board. The initial aim was to create a structure that provided for participation by various interests while providing space for other trustees with additional skills and experience. It had been hoped that NPG would nominate a board member, but its legal advice was that this was outside its powers. The solution was to extend an open invitation to NPG to attend Trust meetings as an observer.

1.482 The County Council’s initial business planning for the museum trust was

based on the costs of a much-reduced revenue budget, passed over to the Trust as annual grants, Some staff were redeployed within the Council, but those remaining at Bodelwyddan were retained as Council employees, with protection of salary, pensions and conditions of service, with their costs recharged by the Council to the Trust; subsequent appointments by the Trust would be to its own adopted pay rates and conditions of service.

1.483 The museum trust was incorporated in February 1994. Initially relationships

between Council and Trust were tense, largely due to the annual funding regime precluding longer-term financial planning. Eventually, a formula was agreed, based on the trust receiving a grant equivalent to the costs of maintaining the building and collections in a dormant state (ie without public


opening), with the museum trust being able to bid annually for top up funds to meet projected annual deficits, based on agreed need. A trading company was established to manage non-charitable activities.

1.484 Local government reorganisation in 1996 saw the interest of Clwyd County

Council pass to the (smaller) Denbighshire County Council. The close relationship between trust and the local authority continued, perhaps to the extent that some trustees viewed the Trust as an adjunct of the Council.

1.485 However, by 1998 the business model on which the trust was based was

beginning to fail. While the arrangement with the hotel provided an annual income of around £100,000, falling visitor numbers (following the general trend) and their impact on both admission income and trading operations led to an increasing reliance on income generated through special events. This was a high-risk strategy with variable results. The result was that the Trust, almost unknowingly, slipped into a financial crisis, knowledge of which only emerged through the annual audit.

1.486 A change of Director led to measures to stabilise the position, based on

realistic forecasts of income and strict controls on expenditure. With the agreement of the Council, the staff secondment arrangement that had been in place since 1994 was terminated, and a staff restructuring led to a reduction in overall staffing levels and the adoption of working practices that reflected more closely the Trust’s needs. The trust’s special events strategy moved from being an impresario to a renter of facilities. A higher priority was given to education, reflected in the establishment of the Joint Area Museums Education Services (JAMES) at the Castle.

1.487 While visitor numbers remained lower than they were in 1994/5, increased

income per visitor and careful cost control (especially in respect of staff) meant that within two years the Castle returned to generating operating surpluses. This enabled the creation of sufficient reserves to fund development, which in turn provided leverage for funding from the NPG/Department for Culture, Media and Sport, Heritage Lottery Fund and Council of Museums in Wales for the refurbishment of the museum galleries (including those of the National Portrait Gallery), the creation of new interpretative displays and a temporary exhibition gallery.

1.488 A three-year funding package agreed in 1999 has been replaced by annual

bids for funding which, after remaining at £194,000 for several years reduced to £192,000 in 2004/5 and to £190,000 for 2005/6. In addition, from 2003/4, costs of £13,000 that had not been devolved in 1995 (including general buildings maintenance, servicing of the lift and fire extinguishers, and some heating costs) have become the responsibility of the Trust. The resale arrangement for Museum tickets with the hotel was discontinued in 1994, though it transpired that hotel guests are prepared to pay a higher direct admission charge than purchase discounted tickets at the hotel, so that hotel visitor numbers have risen.


1.489 The financial implications of the change are shown in Exhibit 1.4.13. It demonstrates a reduction in core funding balanced by an increasing reliance on earned income, but it may be that the Museum’s capacity to generate additional funds to meet running costs is reaching its limit, and that further real-value reductions in core funding could compromise its future.

Exhibit 1.4.13: Bodelwyddan Castle Financial Performance 1993 - 2003

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

750,000

800,000

850,000

1993/4 1994/5 1995/6 1996/7 1997/8 1998/9 1999/2000 2000/01 2001/02 2002/03 2003/04

Core funding Rent Operating Income Grants Other

1.490 Over the period that Bodelwyddan has been operated as a museum trust:

the Council’s annual subsidy for operating Bodelwyddan Castle reduced from £632k in 1993/4 to £192k in 2004/5 which, in terms of relative value based on Retail Price Index, equates to a reduction of around 70%;

visitor numbers have halved (from around 75k to 35k), though the earned

income per visitor has increased from £1.44 to £3.82;

staff numbers have reduced from 29 to 23, and the proportion of the annual budget applied to personnel costs has reduced from 60% of gross expenditure to 54%; and

the Trust’s education and temporary exhibition programmes have grown.

Dudley Metropolitan Borough Council – Black Country Living Museum65

1.491 Exhibit 1.4.14 provides key statistical information on the Black Country

Museum Trust at Dudley, which operates the Black Country Living Museum.


65 Information from Black Country Museum Trust; Annual Reports & Financial Statements

2002 - 2005

Exhibit 1.4.14: Black Country Museum Trust: Key Statistical Information Date of foundation 1966 Date of Devolution 1976 No of sites 2 Funding Agreement Annual Incoming Resources £2.922 m* No of Directors who are Trustees 16% of Turnover • No. nominated 5• Earned income 89 • No. nominated by core funder 2• Core Grant 2 • Management committee No• Other Public Funds 2 • Audit Committee No• Non-Public Funds 1 • HLF funding 0 No of staff 130• Renaissance 0 • Costs % expenditure 50% Trading Subsidiary Yes Pension Scheme: • % Net Profit 29 • Local Government Pension

Scheme Yes

• Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) (57,771) 152,752 136,254 210,082 899,344 Total Assets (£) 3,888,332 4,104,718 4,005,020 4,139,786 4,761,537• Restricted 3,718,339 3,718.385 3,649,725 3,752,716 3,755,409• Unrestricted 169,993 386,333 355,295 387,070 1,006,128 Visitor Numbers 220,924 244,159 219,631 214,146 240,494

* Net of extraordinary income Latest Accounts to 31 March 2005 1.492 The Museum’s origins are in the 1950s, when Dudley council’s then Librarian/ Curator proposed the idea of a local history museum for Dudley and the

Black Country. The idea developed in the following years and in 1966, following a local government reorganisation that enlarged the Dudley council area, the first staff members were appointed by the council to investigate whether sufficient collections existed to make such a museum a worthwhile proposition. A programme of temporary exhibitions at Dudley’s Central Museum demonstrated both public interest and the existence of significant collections.

1.493 The scale and size of many of the objects proposed for preservation

suggested an open-air museum would be the most appropriate model; a 26-acre site was purchased in 1970, a Friends organisation created (1970), and a groundswell of public support began to emerge. The Council decided that the nature of the development – and the need to secure substantial funds from outside the public sector – made it appropriate to develop the project as a museum trust, and the Black Country Museum Trust Limited was incorporated in 1975. The Black Country Museum Development Trust was established at the same time to raise funds from a wide range of sources. Originally the primary fund raiser, it then contributed to particular, selected, museum projects before it was dissolved in 2005. In 1976 the one full-time


member of the Council’s museum staff with social/industrial history responsibilities transferred to the Museum Trust’s employment.

1.494 Museum staff moved onto the Tipton Road site in 1976 and first ten years of

the Museum’s life saw it raise £3 million to develop the Museum (between £5.5 and £6.5 million in current values). The first phase of developing the museum site – the industrial village adjacent to the canal – is all but finished, and an enlarged entrance building with exhibition halls, visitor facilities, collection stores and archive centre was completed in 2000. The Museum has established a £5 million development programme for renewing and enhancing the current product, including expansion of the village area.

1.495 After peaking at around 305,000 visits in 1990, the museum now averages

around 230,000 visits a year, (including 70,000 schoolchildren in organised groups) generating around £1.7 million in earned income, or around 60% of a total annual turnover that is approximately £2.8 million.

1.496 The Museum’s board, which can have up to sixteen members, normally

meets six times a year, and can include two nominated by Dudley Council and three from the other local authorities in the Black Country with other members being drawn from the local community, industry and commerce. Its staff is headed by a Director, and it employs around 150 people (including part-time workers), with a payroll of around £1.25 million. The Museum Trust formerly operated its retail and catering facilities directly, but in 1995 established Black Country Museum Enterprises Ltd, a wholly-owned trading subsidiary, which is now contributing around £300,000 pa from trading activities with a turnover of £1,012,000.

1.497 Until its abolition in 1985 the West Midlands County Council provided some

funding, and Dudley Council has continued to make a contribution each year. In 1996 the Museum’s funding from both West Midlands and Dudley Councils was £50,000, which has a current equivalent value of £230,000, based on increases in RPI. In contrast, total local authority support in 2005/6 is a revenue grant of £65,000 from Dudley Borough Council – less than 3% of the Museum’s income. There is no formal between the Council and the Trust. The grant is negotiated each year, based on an implicit understanding in the Council’s cultural policy that the Museum undertakes part of the council’s museum responsibilities in respect of social and industrial history.

1.498 The Council makes direct provision of museum services at three sites – Dudley Museum & Art Gallery, Broadfield House (Museum of Glass) and Himley Hall. It has not been proposed that these are also appropriate candidates for museum trust status. The Audit Commission inspection of the Council’s Best Value review of its cultural facilities (including museums and galleries) suggests that, overall, they are fair with uncertain prospects for improvement. It acknowledges that the Council is increasingly finding alternative ways to improve its services, and is willing to explore other means of service delivery. It notes that the Zoo, the Black Country Living Museum and the Dudley Canal Trust have been run for some time by independent


organisations but are supported by the Council in various ways, thereby supplementing the Council’s own capacity and sharing risk.

Durham County Council: The Bowes Museum66

1.499 Exhibit 1.4.15 provides key statistical information on the Bowes Museum: Exhibit 1.4.15: The Bowes Museum: Key Statistical Information

Date of foundation 1892 Date of Devolution 2000 No of sites 1 Funding Agreement 5 year Incoming Resources £1.951 m No of Trustees 14% of Turnover • No. nominated 2• Earned income 42 • No. nominated by core funder 2• Core Grant 23 • Management committee Yes• Other Public Funds 16 • Audit Committee Yes• Non-Public Funds 4 • HLF funding 0 No of staff • Renaissance 15 • Costs % expenditure 49 Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension

Scheme Yes*

• Defined Benefit/Contribution Designated Collections Yes • Personal Pension Yes

2001 2002 2003 2004 2005 Net Current Assets (£) 521,556 512,531 504,418 540,468 489,833 Total Assets (£) 1,385,704 1,363,695 1,153,461 1,273,626 1,324,868• Restricted 1,131,209 1,131,094 878,232 746,037 825,067• Unrestricted 254,495 232,601 275,229 527,589 499,801 Visitor Numbers 76,064 78,363 92,373 92,762 119,682

*Staff transferred from Durham County Council only Latest Accounts to 31 March 2005 1.4000 The Bowes Museum – collections, building and park – was created by

husband and wife, John and Josephine Bowes, to display their collection of fine and decorative arts. Housed in a monumental building of a mid-19th century French style, it is set in a small landscaped park close to open countryside on the edge of the historic market town of Barnard Castle (population c 7,000) in the North Pennines.

1.4001 Although construction begun in 1869, the Museum was not completed and

opened until 1892, after the death of both John and Josephine. During its first year of opening it attracted nearly 63,000 visitors to what was a free-admission museum. Subsequently, the Museum’s Trustees expanded the founding collections with local history and British decorative arts. In 1997 the


66 Information from the Bowes Museum; Annual Reports & Financial Statements 2000 - 2005

Museum’s collections were acknowledged by the (then) Museums & Galleries Commission as pre-eminent and worthy of Designation, under the scheme it introduced in response to government’s wish to acknowledge important museum collections in the English regions.

1.4002 Notwithstanding that the Museum had been endowed with £135,000 (with an

equivalent value of around £12 million in present-day values), it has had a troubled financial history for almost all its life. Within five years of opening the Charity Commissioners advised the introduction of admission charges; financial and building maintenance problems caused periodic closures between 1898 and 1909; some of the collections were sold in the 1940s to meet maintenance and other running costs. The establishment of the Friends of The Bowes Museum in 1949, supported by the then Queen Elizabeth, created an important group of advocates for the Museum; it began to receive annual grants from Durham County Council, and in 1956 the Council agreed to take over responsibility for the Museum as sole trustee of a charitable trust under a Scheme made by the Minister of Education.

1.4003 Initially this arrangement worked well. Additional staff were appointed and the

resources deployed to maintain the building were increased. Conservation studios were created for paintings (1957) and textiles (1980), and during the 1970s a woodwork shop was provided. In the early 1990s the building was partly rewired and redecorated, and a new reception area, shop and café provided. Fire safety standards were upgraded to enable public performances in two galleries, and security was enhanced so that the second floor was able to meet the Government Indemnity standard. Some galleries were redisplayed.

1.4004 However, the second half of the 1990s saw financial pressures on the County

Council increase to the point where they began to impact on the Museum. The collapse of the coalmining and other local heavy industries, taken with the impact of local government re-organisations that led to reductions in the Council’s tax base, removed the Council’s financial headroom. From 1990 this was reflected by a continuing deterioration in the Council’s revenue support on which the Museum relied. By now the contribution made by the Museum’s endowment (which in 1996 stood at £800,000) was marginal, yielding only about £29,000 pa. The consequence was reduced staffing levels, deferred maintenance and squeezed activities budgets.

1.4005 In 1997 the County Council felt that it could no longer afford to subsidise the

museum’s budget to the extent of £480,000 pa. It proposed to close the Museum during the winter months, and seek permission to sell some of the collections to create a £10 million endowment to generate an operating income for the Museum of £600,000.

1.4006 This proposal was met by universal dismay among the Museum’s

stakeholders and supporters, and as a consequence the Secretary of State for Culture, Media and Sport asked Sir Richard Foster, Director of National Museums and Galleries on Merseyside, to conduct an independent review,


with terms of reference that included advice on both short-term and longer-term issues.

1.4007 Within four months Sir Richard had undertaken a full scrutiny, which had led

to a report making eight substantive recommendations to address the immediate difficulties facing the Council, and nine proposals concerning the longer term. These included a review of the Museum’s governance, with a view to broadening its scope.

1.4008 The County Council decided, in response to the Foster Review, that it would

seek permission from the Charity Commission to establish a new charitable company to operate and manage the Museum. The Museum’s assets would also transfer to the company, but would remain ring-fenced as restricted funds, with the endowment constituted as a special trust administered by the museum trust as sole trustee, an arrangement analogous to that in which the Council had participated.

1.4009 The museum trust, chaired by Viscount Eccles, a distinguished figure in the

world of business, and former Chairman of Courtaulds, took over responsibility for the Museum in April 2000, on the basis of a with the County Council that, besides making a one-off payment of £250,000 for urgent repairs and maintenance, committed the Council to provide revenue support for a five-year period. An initial grant of £650,000 would taper to £450,000 by 2004/5, and the level of any continuing support would be discussed with the trust at the end of the third year of the Agreement.

1.4010 In return for this financial support the museum trust was required to:

use its best endeavours to:

o achieve 80,000 visits per year by the end of the Agreement;

o comply with the English Tourist Board’s Visitor Charter, and maintain Designation and Museum Registration status;

o be a member of the Museums Association, North of England

Museums Service and English Tourist Board;

permit free access to 13 named schools until the end of 2001 and one named school to the end of 2003;

co-operate with the Council’s strategic planning for tourism, culture and

regeneration, as defined in its mission statement and corporate objectives;

report to the Council annually, with reference to the Council’s mission and

corporate objectives; and


acknowledge the Council’s financial assistance in print and other media generated by the Trust, using a specified form of words.

1.4011 Following review at the end of the third year of the first Funding Agreement,

the Council and museum trust entered into a new Agreement in 2004, which provided for a further five years of Council revenue support on a similar basis to the original Agreement, though any annual increase in the base funding of £450,000 would be limited to inflation increases in line with RPI.

1.4012 The obligations on the museum trust throughout the period of the second

Agreement were in essence those of the first, but with the following variations:

the aims of the North East Hub, created by Renaissance in the Regions, were acknowledged;

visitor numbers were to be increased to 120,000 pa by the final years of

the Agreement;

the museum trust was required to agree a Lifelong Learning strategy with the Council;

and to plan in advance with Council officers proposals that fulfilled the

Council’s priorities;

the Council was to be given free use of the Museum and/or its grounds and facilities (though it was to reimburse any additional costs that fell on the Museum as a consequence); and

the museum trust was required to follow good practice in diversity and

equal opportunities. 1.4013 During its first five years of operation the museum trust has:

increased visitor numbers from 65,000 in 1998/9 to almost 120,000 in 2004/5;

introduced free entry for under 16s;

secured £1.3 million from English Heritage and the Northern Rock

Foundation for roof repairs, and funding from the County Durham Economic Partnership for new, additional galleries in areas currently used for administrative purposes;

developed a lifelong learning and outreach team, with almost 10,000

participating children in 2004/5;

was chosen by the National Art Collections Fund (in competition with other museums) to receive the gift the Lady Ludlow Collection of


eighteenth-century English porcelain, which was displayed with the financial help of the Headley Trust and the Bowes Friends;

established partnerships with National museums (the Wallace Collection,

National Portrait Gallery, British Museum, National Gallery and Victoria and Albert Museum) in relation both to exhibitions and education activities;

worked with the local economic development and marketing companies to

help regenerate the local economy; and

increased average staff numbers from 23 (1997/98) to 53 (2004/5). 1.4014 Exhibit 1.4.16 demonstrates the variances in cost at the Bowes Museum

before and after devolution Exhibit 1.4.16: Cost Differentials before and After Devolution

1996/7 1997/8* 1998/9* 2000/1# 2001/2 2002/3 2003/4 2004/5

Visitor Numbers 77,591 65,000 65,000 76,064 78,363 92,373 92,762 119,682 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Employees 356 372 331 475 655 711 800 957 Premises 200 154 149 172 176 180 194 210 Supplies/services 169 176 148 264 313 422 592 746 Support services 37 40 50 49 62 72 37 52 762 742 678 960 1,206 1,385 1,623 1,965 less Income 252 205 181 1472 1,196 1,333 1,613 1,911 less Endowment 28 28 29 968 42 36 40 40 Net Income/ (Expenditure)

(482) (509) (468) 1,480 32 (16) 30 (14)

Cost to Council 482 509 468 650 600 550 500 450 Subsidy per visit £6.21 £7.83 £9.36 £8.54 £7.65 £5.95 £5.39 £3.76

* = Estimate; # = November 1999 – March 2001

Harrow London Borough Council: Headstone Manor67

1.4015 Headstone Manor is a 14th century manor house, with 17th, 18th and 19th century alterations, which came into the hands of the local council with the acquisition of its associated estate in 1925. With a barn and granary (relocated from Pinner in 1991) it has been the home of the Harrow Museum and Heritage centre since 1986.


67 www.harrowarts.com/museum/

1.4016 In 2001 Harrow Council transferred the operation of its arts and museums services to an NPDO - Arts Culture Harrow – which operates under a with the Council. At the same time Harrow Museums Trust was created as an associated charity, with its activities entirely subsumed within those of the NPDO, with both bodies having common trustees. This precludes providing any separate statistical information for the Museum alone. The Museum Trust itself had no income in the year to 31 March 2005, and expenditure of £275. The NPDO provides the Museum with four members of staff (curator, museum manager, site supervisor, education officer and Harrow Asian Archive Co-ordinator), who are supported by volunteers.

1.4017 During 2005 work began on the first major phase of restoration of the museum building, with repairs focusing on the oldest parts of the manor house that have been under a temporary protective scaffold for nearly 20 years, leaving a building that is structurally sound and weatherproof. Funding is now being sought to restore the remaining parts of the house, which include the bridge and moat, landscaping the grounds and providing interpretive exhibitions.

1.4018 In December 2005 Harrow Council received a report indicating that Arts Culture was in financial difficulties, especially in terms of cashflow, and agreed a rolling credit line to stabilise its current financial position, pending a fuller review by the Council.

Inner London Education Authority: Geffrye & Horniman Museums68

1.4019 These museums are government-funded Non Departmental Public Bodies

(NDPBs). As such they differ from the devolutions where local authorities are the core funders. As a consequence comparison with other devolved museums may not be helpful, and so statistical information is not provided for these museums.

1.4020 Established as a museum of furniture in 1914 by the London County Council,

the Geffrye is housed in the early 18th century former almhouses of the Worshipful Compnay of Ironmongers. Its collections now reflect the changing style of the English urban domestic interior from 1600 to the present day.

1.4021 The Horniman Museum and Park represents the gift of Frederick Horniman

to the London County Council in 1901, and houses three distinct collections: ethnography, natural history and musical instruments, reflecting its founder’s eclectic interests. It is housed in a striking Art Nouveau building on Forest Hill in Lewisham.

1.4022 Following the abolition of the London County Council and the reorganisation

of London’s local government in 1965, responsibility for both the Geffrye and the Horniman passed first to the Greater London Council, and when that in turn was abolished in 1986, both passed to the Inner London Education


68 Dewing (1991), Boston (1992), DCMS (2002)

Authority (ILEA). The abolition of the ILEA in 1989 saw the Geffrye constituted as the Geffrye Museum Trust from 1 April 1990.

1.4023 Greater legal complexities arising from the special trust under which the

Horniman was held led to it passing at first to the London Residuary Body on 1 April 1990, with its costs partly being met by the Residuary Body and partly by central government through the Museums and Galleries Commission. The Horniman Museum and Public Park Trust took up responsibility for managing the museum and park (and in so doing implementing the donor’s intention that both should be managed as one) in April 1992. On that date the Department for National Heritage (now Department for Culture, Media and Sport) began to fund both Geffrye and Horniman museums directly as sponsored bodies.69

1.4024 The Geffrye has a board of 13 trustees, of whom four (including the chair)

are nominated by the Secretary of State. Similar arrangements apply at the Horniman, other than it has 12 trustees. Following the creation of the Greater London Authority it was decided that the Mayor of London should have responsibilty for nominating one appointment at each Museum.

1.4025 Funding for the museums is analogous to those for museum trusts directly

devolved from local authorities: each museum has a three-year Funding Agreement based on the Department’s current priorities, which in turn derives from the Daepartment’s Public Service Agreement with the Treasury. They are also subject to the accounting and organisational rules that come with their NDPB status.

1.4026 The total core funding of both institutions in the last year of ILEA (£1.583 million) has a current value of £2.565 million (RPI) value, compared with the £5.4 million that represents DCMS’s funding of these institutions in 2004/5. 70 Revenue income other than core grant-in-aid has shown a sevenfold increase. However, the cultural change in the museums was (initially at least) even more momentous than increased resources. As the then Director of the Horniman Museum wrote in 1992 ‘While the independence of the Horniman has introduced new pressures of fundraising and increased administration, it has at the same time liberated us from a bureaucratic framework that failed to provide necessary resources, and it has allowed us to pursue again . . . a high-quality visitor service, a sound operating base and a safe environment for the public and collections.’ 71

Kent County Council – Museum of Kent Life72

1.4027 Exhibit 1.4.17 provides key statistical information on the Museum of Kent Life

at Cobtree near Maidstone:


69 Dewing (1991) 70 DCMS Annual Report 2005 71 Boston (1992), 31 72 Museum of Kent Life Annual Report & Financial Statements 1995 - 2005

Exhibit 1.4.17: Museum of Kent Life: Key Statistical Information

Date of foundation 1983 Date of Devolution 1992 No of sites 1 Funding Agreement 3 Years Incoming Resources £0.452 m No of Trustees 15% of Turnover • No. nominated 3• Earned income 77 • No. nominated by core funder 2• Core Grant 14 • Management committee Yes• Other Public Funds 5 • Audit Committee nk• Non-Public Funds 2 • HLF funding 0 No of staff 32• Renaissance 0 • Costs % expenditure 37% Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension Scheme Yes • Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 63,788 92,762 85,721 50,249 77,076 Total Assets (£) 545,049 536,925 622,209 545,054 497,128• Restricted 436,836 427,160 527,193 462,431 417,138• Unrestricted 108,213 109,765 95,016 82,623 79,990 Visitor Numbers 45,750 42,500 43,417 45,132 50,197

Latest Accounts to 31 March 2005

1.4028 The Museum occupies Sandling Farm, once part of the Cobtree Estate, which was bequeathed to the people of Maidstone by Sir Garrard Tyrwhitt-Drake in 1964. A planned museum of rural life opened as The Museum of Kent Life in 1985, as a joint arrangement between Maidstone Borough Council (who owned the site) and Kent County Council (who provided curatorial oversight).

1.4029 This agreement unravelled in a very short space of time, and it was decided that a museum trust should be created to take over the management of the Museum, with representatives of both the County and Borough Councils sitting on its board. This new trust came into being in 1993.

1.4030 During succeeding years the museum has:

developed the site – within the last five years five buildings have been moved from their original locations and re-erected at Cobtree, as well as a new agricultural store;

initiated a substantial events programme, with around ten major events

each year;

won a number of awards, including South-East England Visitor Attraction of the Year, a Sandford Award for its educational work (2005), and it was


also a selected candidate for the 1996 European Museum of the Year Award;

developed significant schools activity, with an average of 8,000

schoolchildren using the Museum each year; and

organised holiday activities aimed specifically at children, and introduced a Young Farmers Club for boys and girls aged between 10 and 23 without a farming background, who help the Museum with its animal husbandry.

Exhibit 1.4.18: Museum of Kent Life: Museum Trust Income

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

1994/5 1995/6 1996/7 1997/8 1998/9 1999/2000 2000/2001 2001/2 2002/3 2003/4

Core funding Grants & Donations Operational Income Other Income

1.4031 Exhibit 1.4.18 shows the income base for the Museum since 1993. This illustrates that the County Council’s core funding represents 25% of income over the period, with over 50% being earned, and the balance being met by grants (mainly from public funds) and donations.

Sheffield City Council: Sheffield Industrial Museums Trust & Sheffield Galleries & Museum Trust

1.4032 The first public museum in Sheffield opened in September 1875, in Weston Hall which, with its park, had been purchased by the then City Corporation two years earlier, housing the collections of the Sheffield Literary and Philosophical Society. It proved immediately popular, attracting an average of 173,000 visits for each of its first twelve years. In 1887 the Mappin Art Gallery was opened alongside the Museum; badly damaged by bombs during World War 2, it reopened to the public in 1965.

1.4033 The Graves Art Gallery, sited in the building that houses the city centre’s public library, was opened in 1934, and includes a broad range of pictures, notably 20th century British paintings and watercolours. Bishop’s House is a 16th century timer-framed farmhouse with 17th century improvements,


including early Jacobean decorative plasterwork. Displays focus on the history of the house and Sheffield life in Tudor and Stuart times. The collections of the Ruskin Gallery, owned by the Guild of St George, designed ‘for the liberal education of the artisans of Sheffield’, were loaned to the City Council in 1985.

1.4034 Abbeydale is a late18th/early 19th century scythe works that includes workshops that demonstrate their manufacture from raw materials to finished product. It was restored following public appeal in 1964. The Kelham Island Industrial Museum opened to the public in 1982 in the former generating station for the city’s trams, and its collections represent Sheffield’s technological and social history.

1.4035 The museums and galleries services (they were administered separately until 1983) had traditionally been highly-regarded by local residents and had powerful political champions. However, the position changed in the mid- 1980s, when changing priorities, internal reorganisations and loss of some key political champions led to the increasing marginalisation of the museums and galleries service, evidenced in decreasing budgets. The trend was exacerbated by the city’s increasingly straitened circumstances, partly due to the pressures found in all local authorities, but also the particular circumstance of the need to service the capital debt incurred in building the World Student Games in 1991.

1.4036 One of the City Council’s responses to these difficulties was to devolve services to external, public sector providers, and it now funds a family of trusts, which include museums and galleries, sport, the Botanic Garden, and arts venues. The Council has used these arrangements as an opportunity to create formal partnerships with other key players in the city, especially the universities and local commerce and industry. Within this arrangement are two separate museum trusts – the Sheffield Industrial Museums Trust and Sheffield Galleries and Museums Trust.

The Sheffield Industrial Museums Trust73

1.4037 Exhibit 1.4.19 provides key statistical information on Sheffield Industrial Museums Trust:

Exhibit 1.4.19: Sheffield Industrial Museums: Key Statistical Information

Date of foundation 1970 Date of Devolution 1994 - 8 No of sites 2 Funding Agreement 5 years Incoming Resources £1.537 m No of Trustees 12% of Turnover • No. nominated 2• Earned income 9 • No. nominated by core funder 2 • Core Grant 24 • Management committee Yes


73 Information from Sheffield Industrial Museums Trust; Sheffield Industrial Museums Trust

Annual Reports & Financial Statements 1995 - 2005

• Other Public Funds 58 • Audit Committee No• Non-Public Funds 7 • HLF funding 48 No of staff 17• Renaissance 0 • Costs % expenditure 55 Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension Scheme Yes • Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 32.753 108,049 31,666 164,677 56,054 Total Assets (£) 146,756 194,760 501,337 546,887 1,343,264• Restricted 257,026 283,517 620,552 675,044 1,454,952• Unrestricted (110,270) (93,757) (119,015) (111,688) (128,157) Visitor Numbers 57,000 54,000 57,000 56,000 65,000

Latest accounts to 31/3/2005 1.4038 The 1980s and early 1990s were difficult times for museums in Sheffield. By

1992 it had become apparent that slicing the budgets of the city’s individual museums on a piecemeal basis was becoming unsustainable, and that a more strategic approach would be to close individual museums, and invest their budgets in the remaining institutions.

1.4039 Consequently, the city’s Industrial Museum at Kelham Island, opened ten

years’ earlier in 1982, was scheduled for closure. It was perceived as expensive in terms of its visitor numbers, which had dropped from an opening high of around 60,000 to around 40,000 in the 1980s, and then fallen away to a low of 32,000. There was not to be complete withdrawal from the site – the collections there would, in effect, be moth-balled. As a consequence of the uncertainty about the Museum’s future, many of its staff left or transferred to other city museums. The closure proposal had also stimulated public interest in maintaining access to the collections, and a museum trust was proposed as the way forward.

1.4040 This led to a partnership between the City Council, Sheffield Hallam

University and the Company of Cutlers in Hallamshire, to form Kelham Island Museum Trust in November 1994. The City Council agreed to make an annual grant that was the equivalent cost to mothballing the site, and the University also agreed to make an annual contribution. The Board included nominees of the partnership bodies, and was chaired by Norman Adsetts, a distinguished figure in the local business community who had been President of Sheffield Chamber of Commerce and Chairman of the Yorkshire and Humberside Region of the CBI.

1.4041 Thus the trust started with one-third of the former budget and less than half

the previous staff. It only had a future if it could increase visits by the public, and to achieve this aim it adopted a strategy of regular events and activities. Family-friendly programming based on science, environment, creativity and


living history enabled visitor numbers to climb by 50% in its first three years, achieving an 80% increase in earned income.

1.4042 This early success was acknowledged by the Council which, during

consideration of the closure of the Abbeydale Industrial Hamlet during a further round of budget cuts in 1995, invited the Trust to manage the site on the same basis as Kelham Island – that is, a core grant equal to the money the Council would need to spend to maintain the site on a care and maintenance basis. The Trust accepted this wider role, and was reconstituted as the Sheffield Industrial Museums Trust. The Trust now also manages educational activities and occasional open days at another Council-owned site - Shepherd Wheel - and it is anticipated that once £750,000 has been raised to repair its water-powered grinding mill and leaking dams, the Trust will become responsible for its day-to-day management.

1.4043 During its first ten years the Museum Trust has:

raised over £2 million from public sector funding bodies, and £1 million

from private and corporate donors for development projects;

redeveloped the Kelham Island site, with imaginative new displays;

secured almost £500,000 to repair and improve the Abbeydale site;

developed a range of lifelong learning services and activities; and

worked with Sheffield Hallam University to develop the SCOPE Science Centre and to deliver its regional public understanding of science strategy.

1.4044 These are considerable achievements, but the Museum faces a number of

financial challenges. Notwithstanding substantial investment, visitor numbers at Kelham Island have not grown to any great extent. That it is a small-sized admission-charging museum in an area characterised by larger free museums and science-focused visitor attractions does not help it, nor does its five-day opening regime which excludes Saturdays – a legacy of pre-devolution opening arrangements that the Trust has been unable to address.

1.4045 The Council’s initial Funding Agreement with the Trust ran to 1999, when it

was renewed (taking into account the additional responsibility for Abbeydale), and a further five-year term was agreed in 2004. In that period the Council’s grant rose from £129,000 to £378,000. While this represents a 193% increase, it is based on pre-devolution budgets for a care-and-maintenance operation, not for a functioning museum. The growth also reflects the additional responsibilities taken on by the Museum for Abbeydale.

1.4046 Since the Trust’s creation:

core funding has contributed 37% of income;


external funding has generated 47% of income, two-thirds of which came from public funds; and

18% of income has been earned from admissions and sales.

1.4047 Exhibit 1.4.20 shows the Museum’s income and expenditure since its

foundation. It demonstrates the substantial achievements of the Trust in levering external funding to maintain and develop its sites, but it also reflects a scenario common in many independent museums – the high reliance on external project funding not only for development but to provide the liquidity and capacity to sustain the organisation.

Exhibit 1.4.20: Sheffield Industrial Museums Trust - Income Analysis

1.4048 The consequence of this is that the Museum has no free reserves to respond

to inevitable unforeseen circumstances – most recently increased costs of LGPS and energy charges. Although the City Council has always responded positively to these issues during renegotiations of Funding Agreements, this has been on a reactive basis, and does no more than maintain the existing position, which has given little headroom to the Trust for the future.

Sheffield Galleries & Museums Trust74

1.4049 Exhibit 1.4.21 provides key statistical information on Sheffield Galleries & Museums:


74 Information from Sheffield Galleries & Museums Trust; Sheffield Galleries & Museums

Trust Annual Reports & Financial Statements 1998 - 2005; Roodhouse (2000)

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1994/5 1995/6 1996/97 1997/98 1998/9 1999/2000 2000/2001 2001/2 2002/3 2003/4 2004/5

Core funding Grants Operating Income

Exhibit 1.4.21: Sheffield Galleries & Museums Trust: Key Statistical Information

Date of foundation 1875 Date of Devolution 1998 No of sites 4 Funding Agreement 3 years Incoming Resources No of Trustees £9.436 m 12% of Turnover 3• No. nominated

6 2• Earned income • No. nominated by core funder 22 Yes• Core Grant • Management committee 70 Yes• Other Public Funds • Audit Committee

2 • Non-Public Funds No of staff 39 83• HLF funding

1 51• Renaissance • Costs % expenditure Trading Subsidiary Pension Scheme: Yes

11 Yes*• % Net Profit • Local Government Pension Scheme • Defined Benefit/Contribution Designated Collections Yes Yes• Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£000)

(77) (76) (119) (230) 808

Total Assets (£) 419 450 193 7,936 7,936• Restricted 293 309 143 7,902 7,800• Unrestricted 126 141 49 34 136 Visitor Numbers 194,535 367,912 434,824 503,986 nk

* Former employees of Sheffield City Council only Latest accounts to 31/3/2005 1.4050 In 1997 Sheffield’s museums and galleries service included Bishop’s House,

the City Museum, the Graves and Mappin Art Galleries, and the Abbeydale Industrial Hamlet (though this was scheduled to join Kelham Island Museum as part of the Sheffield Industrial Museums Trust on 1 April 1998). The City Council’s budget was £1.28 million, and the museums and galleries employed 55 staff.

1.4051 The general decline in funding experienced by Sheffield’s industrial

museums75 was no less keenly felt at the city’s museums and art galleries. The temporary exhibition programme had collapsed, there were no funds for new purchases or investment in ICT, opening hours were reduced and at one stage serious consideration was given to closure of the Graves and Mappin galleries with compulsory redundancies.

1.4052 However, at the same time the City Council was conscious of the potential

strengths of the museums and galleries in regenerating the city. When negotiations between Bradford City Council and the Victoria and Albert Museum (V&A) to establish a northern outlet for the V&A foundered, the City


75 para 1.4032

Council stepped in to develop a scheme as part of its ‘Heart of the City’ Regeneration project. For this to be achieved, the city’s museums and galleries would need to be revitalised.

1.4053 The advent of the Arts Council for England’s Stabilisation Programme,

underpinned by National Lottery funding, provided an opportunity for funding this process. An award of £1.15 million over four years was made in 1997. The grant came with conditions, including that:

the award was conditional on the creation of a museums and galleries

trust ( which the Council already had under active consideration) to manage the museums and galleries; and

the City Council’s commitment to continue core funding of £1.050 million

would continue to 31 March 2001 and that it would thereafter guarantee ‘a realistic minimum grant’ for the following seven years to allow the trust to plan effectively’ which was later established as £1.21 in 1998/9 and £1.51 year for the following five years.

1.4054 Simultaneously, a city council application to the Millennium Commission was

approved, to build the £13 million Millennium Galleries, in partnership with the V&A, as a venue to mount major shows originating from its collections. The Council decided to include the project within the museum and galleries trust package.

1.4055 The Council approved the establishment of the museum trust in May 1997,

and the Sheffield Galleries & Museums Trust came into being on 6 April 1998. It has been chaired from the outset by Sir Hugh Sykes, a distinguished businessman (former Chairman of National Australia Group Europe and one of its subsidiaries, Yorkshire Bank plc) who has also been a member of the Industrial Museums Trust and was Chairman of the Sheffield Development Corporation. Besides nominees of the City Council, the Trust’s includes a nominee of the V&A.

1.4056 Since 1998 the Trust has achieved:

more than £16 million of inward investment in the museums’ infrastructure;

completion and opening of the Millennium Galleries in April 2001;

the fundraising and construction phases of the £18 million redevelopment

of the City Museum and adjacent Mappin Art Gallery, now known as Weston Park Museum;

a new collections storage facility;


a 159% growth in visitor numbers, from around 193,000 to around 500,000 visitors each year, with the education audience increasing from around 15,000 to 33,000;

135 temporary exhibitions, including tours not only from the V&A but also

from the Tate and National Portrait Galleries, and a start to the Trust’s own programme of touring exhibitions;

a spread of national partnerships involving the V&A, Tate and National

Portrait Gallery, regional partnerships and local ones with community groups and schools and colleges;

leadership of the Yorkshire Museums Hub in connection with

Renaissance in the Regions; and

by December 2005, a payroll of over 100 employees - almost double the pre-devolution total.

Sheffield Outcomes

1.4057 Exhibit 1.4.22 shows the financial position of Sheffield’s museums and galleries from direct operation through devolution to the current arrangements, where appropriate combining figures from the Industrial Museums Trust and Galleries and Museum Trust.

Exhibit 1.4.22: Revenue Spend on Museums in Sheffield City

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05

Expenditure City Council Funding Other Income

1.4058 It shows that while overall expenditure on museums and galleries has

increased from £2.051 million in 1989/90 to a current spend of over £4.5 million, the Council’s funding has increased by £0.364 million to £2.415 million. This represents an uplift of 18%, compared with increases of 62% in


RPI and 126% in GDP during the same period. Additionally, the plural funding strategies adopted by the museum trusts has led to the proportion of the costs of museum provision met by the City Council reducing from 80% to 48%.

1.4059 In addition, the Council’s annual satisfaction survey reports a steady rise in

Sheffield residents’ satisfaction rate with museums and galleries in recent years, with a 4% increase to 55% between 2001 and 2004, which places it in the top quartile of English local authorities.

1.4060 Exhibit 1.4.23 compares Sheffield’s overall experience with its Nearest Neighbours for 2003/4:

Exhibit 1.4.23: Sheffield City Council Compared with Nearest Neighbours Description Sheffield Leeds Kirklees Wakefield Barnsley Average

Distance 0 0.093 0.185 0.192 0.166 Number of visits 497,199 331,267 na 110,610 95,096 206,834 Number of visits in school groups

32,801 27,768 17,649 9,138 5,323 18,536

Net Expenditure £2.690m £3.691m not

available £0.980m not

available £2.453m

Net Expenditure per head of population

£5.25 £5.14 not available

£3.11 not available

£4.50

Source: CIPFA Annual Leisure Estimates 2003/4; ODPM BVPI 170b

Southwark London Borough Council : South London Gallery76

1.4061 Exhibit 1.4.24 provides key statistical information on the South London

Gallery:

Exhibit 1.4.24: South London Gallery: Key Statistical Information Date of foundation 1897 Date of Devolution 2003 No of sites 1 Funding Agreement 3 years Incoming Resources £0.862 m No of Trustees* 12% of Turnover • No. nominated 3• Earned income 2 • No. nominated by core funder 3• Core Grant 20 • Management committee No• Other Public Funds 27 • Audit Committee • Non-Public Funds 27 • HLF funding 0 No of staff 9• Renaissance 0 • Costs % expenditure 34 Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension Scheme Yes • Defined Benefit/Contribution Designated Collections No • Personal Pension

2001 2002 2003 2004 2005


76 Information from South London Gallery; Annual Reports & Financial Statements 2002-2004

Net Current Assets (£) 339 (12,817) 304,752 322,883 Total Assets (£) 259,192 253,.016 415,108 610,093• Restricted 339 218,814 84,591 298,623• Unrestricted - (26,152) 330,517 311,470 Visitor Numbers around 30,000 each year

* The Gallery has a sole trustee (The SLG Trustee Limited); the information on trustees relates to the directors of that company

Latest accounts to 31/03/200 1.4062 The South London Fine Art Gallery and Library was founded in 1879 as part

of the Free Library and Art Gallery, and over the following century became a leading venue for contemporary arts in South London. Originally provided by Camberwell Council, in time it became part of the London Borough of Southwark. Its reputation increased throughout the 1990s, to the extent it began to receive Arts Council revenue funding. An application to that body for funding to redevelop the building led to the proposal that the Council should devolve the Gallery, and the Arts Council offered National Lottery funding through its Stabilisation Programme to meet the costs of this process.

1.4063 The Gallery is constituted as an unincorporated charity, under a Trust Deed

of 1894, amended by subsequent Charity Commission Schemes, which placed the Borough of Southwark as sole trustee. The Council applied standard local government financial practice to the Gallery’s management, so that was deficit-funded to balance the charity’s accounts at year end. As part of the devolution process a new corporate trustee (The SLG Trustee Limited), a non-charitable company limited by guarantee, was created to replace the Council, with the company’s directors governing the Gallery through the medium of the trustee company. Title to the Gallery’s premises and other land that make up the trust’s freehold property moved from the Council to the new corporate trustee.

1.4064 The transfer revealed some uncertainty as to whether items collected by the

predecessor Councils had been acquired as their corporate property, or in acting as sole trustee of the charity established in 1894. However, it was agreed that it would be desirable for the collection to be kept together and cared for by the local authority. As a consequence, the collection is maintained and managed by Southwark Council on behalf of the Gallery in accordance with a loan agreement with a 25 year term. The Gallery and the Council have committed themselves to reaching agreement on ownership of the different parts of the collection.

1.4065 The directors of the trustee company do not exceed 12 in number, of which

two are nominated by Southwark Borough Council, which now provides a level of revenue support that is greater than at any time during the preceding ten years. The Gallery became independent in October 2003, and during the intervening period sufficient funds were raised to enable a first phase of gallery improvements and creation of an education and outreach team.


St Helens Metropolitan Borough Council: World of Glass77

1.4066 Exhibit 1.4.25 provides key statistical information on the World of Glass at St

Helens in Lancashire:

Exhibit 1.4.25: World of Glass: Key Statistical Information Date of foundation 1892 Date of Devolution 1999 No of sites 1 Funding Agreement Incoming Resources £0.933m No of Trustees 9% of Turnover • No. nominated 3• Earned income 49% • No. nominated by core funder 1• Core Grant 33% • Management committee Yes• Other Public Funds 3% • Audit Committee

• Non-Public Funds 15% • HLF funding 0 No of staff 31• Renaissance 0 • Costs % expenditure 26 Trading Subsidiary Yes Pension Scheme: • % Net Profit 3% • Local Government Pension Scheme No • Defined Benefit/Contribution YesDesignated Collections No • Personal Pension No

2001 2002 2003 2004 2005 Net Current Assets (£) (276,583) 45,430 (156,557) (23,038) (23,568) Total Assets (£) 8,895,348 8,661,433 7,839,674 7,868,060 7,342,474• Restricted 8,895,348 8,661,433 7,720,894 7,995,731 7,515.963• Unrestricted 118,780 (127,671) (173,489) Visitor Numbers nk nk nk 27,251 nk

Latest accounts to 31/03/2005 1.4067 The World of Glass is a joint venture between the Borough Council and

Pilkington plc, who amalgamated their respective museums under this single banner on a site that is adjacent to a 19th century glass-making cone house. The development cost in excess of £14 million, with substantial contributions from the Heritage Lottery Fund, European Regional Development Fund, and the Single Regeneration Budget. The Museum opened in March 2000.

1.4068 The World of Glass manages the collections of the former St Helens Museum

and Art Gallery on a 25-year loan agreement, reviewable every four years, subject to the World of Glass continuing to participate in the Museums Registration scheme, complying with conditions concerning collections care and management, and providing adequate access for the public and researchers.


77 Annual Reports & Financial Statements 1995 - 2005

Torfaen [County] Borough Council: Torfaen Museum Trust78

1.4069 Exhibit 1.4.26 provides key statistical information on the Torfaen Museum

Trust at Pontypool in South-East Wales:

Exhibit 1.4.26: Torfaen Museum Trust: Key Statistical Information Date of foundation 1974 Date of Devolution 1978 No of sites 2 Funding Agreement Annual Incoming Resources £0.232m No of Trustees 17% of Turnover • No. nominated 7• Earned income 13% • No. nominated by core funder 2• Core Grant 38% • Management committee No• Other Public Funds 47% • Audit Committee

• Non-Public Funds 1% • HLF funding 0 No of staff 15• Renaissance not applicable • Costs % expenditure 27 Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension

Scheme Yes

• Defined Benefit/Contribution Designated Collections not applicable • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 25,944 38,069 20,509 (3,630) 65,122 Total Assets (£) 43,360 61,506 52,536 25,654 113,042• Restricted 5,505 4,848 19,103 5,615 70,383• Unrestricted 37,855 56,658 33,433 20,039 42,659 Visitor Numbers 7,498 21,732 33,054 31,671 33,130

Latest accounts to 31/03/2005 1.4070 The Torfaen Museum Trust was founded in 1978 to take over the museum

assets of the Torfaen Borough Council, which included the most eastern of the South Wales valleys, and principally the towns of Blaenafon, Pontypool and Cwmbran. The Transfer Agreement (which was not in fact signed until 1979, after the Trust had started its operations), included the following provisions:

a five-year which increased the Council’s museum funding by the rate of

annual inflation;

the museum premises were to be leased on a 99-year lease at a peppercorn;

although pre-TUPE, staff were to transfer on their same conditions of

service (though in fact these were amended shortly following transfer);


78 Annual Reports & Financial Statements 1978 - 2005

the Council placed its collection on loan to the Trust, and while all new

acquisitions came into the ownership of the Trust, the Agreement specified that they became the Council’s property on winding up, placing a charge over them;

part (75%) of the Council’s grant was deemed to be a payment for

curatorial services in maintaining the Council’s collections, and was therefore subject to VAT; and

the Council donated all the museum’s furniture and equipment to the

Trust. 1.4071 Following the development of the museum at Pontypool, the Trust went on to

rescue several historic buildings at risk, not all of which came to be used as museums. It also, during a period of uncertainty about the site’s future, managed the transition of Big Pit Blaenafon from working coalmine to museum of mining. In recent years the Trust’s work has focused on the Pontypool Museum, where it has developed a range of heritage, education and arts-linked programmes and activities.

1.4072 Exhibit 1.4.27 shows the pattern of income over the trust’s history. After an

early spike reflecting the original development phase the Trust, the trend stabilised. This was reflected in core funding, though here was some depression in the period leading up to Welsh local government reorganisation in 1995/96.

Exhibit 1.4.27: Torfaen Museum Trust Income 1984 - 2004

0

50000

100000

150000

200000

250000

300000

1978

/9

1979

/80

1980

/81

1981

/2

1982

/3

1983

/4

1984

/5

1985

/6

1986

/7

1987

/8

1988

/9

1989

/90

1990

/1

1991

/2

1992

/3

1993

/4

1994

/5

1995

/6

1996

/97

1997

/8

1998

/9

1999

/2000

2000

/1

2001

/2

2002

/3

2003

/4

2004

/5

Core Funding Other Grants & Donations Earned Income


1.4073 Torfaen’s financial results represent one of the longest available time series for a devolved museum trust in the UK. During the 27 years it has been operating:

core funding, though it has risen in terms of RPI, is 36% less in GDP

value than the Council’s grant in 1978/9;

Council funding has contributed 37% of incoming resources - other grants and donations have generated 46%, and earned income 17%;

at the end of the period its unrestricted assets were £43,000, or around

30% of annual expenditure Waverley Borough Council: Godalming Museum79

1.4074 Exhibit 1.4.28 provides key statistical information on the Godalming Museum

Trust:

Exhibit 1.4.28: Goldalming Museum: Key Statistical Information Date of foundation 1920 Date of Devolution 1987 No of sites 1 Funding Agreement Annual Incoming Resources £0.049 m No of Trustees 14% of Turnover • No. nominated 3• Earned income 25 • No. nominated by core funder 1• Core Grant 4 • Management committee Yes• Other Public Funds 25 • Audit Committee No• Non-Public Funds 31 • HLF funding 0 No of staff • Renaissance 0 • Costs % expenditure Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension Scheme • Defined Benefit/Contribution Designated Collections No • Personal Pension

Staff provided by WaverleyBorough Council

2001 2002 2003 2004 2005

Net Current Assets (£) 31,069 29,872 60,270 50,568 39,350 Total Assets (£) 69,115 71,275 87,966 81,109 71,454• Restricted 11,644 15,883 30,213 15,089 1,864• Unrestricted 53,232 59,631 57,753 66,020 69,590 Visitor Numbers 16,433 17,377 16,013 16,761 16,429

Latest accounts to 31/03/2005 1.4075 The museum at Godalming was initially established, in the Old Town Hall, by

Godalming Town Council in 1920. The Museum Sub-Committee comprised


79 Annual Report & Financial Statements 1996 – 2005; Information from Waverley Borough

Council

councillors, council officers and interested members of the public. The Council paid an honorarium to a Museum Attendant and the Borough Surveyor acted as Honorary Curator. In 1952 the post of Curator was amalgamated with that of Borough Librarian and this continued until local government reorganisation in 1974. At that time the new Waverley Borough Council took over administration of the collections in the Old Town Hall while Surrey County Council took over administration of the local studies material which was by now housed in Godalming Library. However, unusually, ownership of both collections remained with Godalming Town Council, a third-tier authority.

1.4076 Waverley Borough Council continued to open the small museum on three

afternoons a week, as had been done almost since its foundation. In the 1980s the possibility of new premises and the encouragement of one of its leading Elected members led to the creation of the Godalming Museum Trust (with a membership strongly representative of local community leaders and business people), which took over the Museum’s day-to-day management in the following year. This transfer was coincident with the Museum moving to a new location, in premises leased by the Trust from the Borough Council. At the same time, Surrey County Council returned the local history material owned by the Town Council, which also came within the Trust’s management.

1.4077 In essence, therefore, the Trust manages three collections:

that of the Godalming Town Council (both objects and books/archives), created between the Museum’s creation in 1920 and local government reorganisation in 1974;

that of Waverley Borough Council, assembled between 1974 and 1987;

and

those items it has itself acquired since 1987. 1.4078 Although the Town Council makes occasional grants to the Museum Trust, its

most significant relationship is with the Borough Council, with which it has had a management agreement since the outset. The latest agreement, completed in 2001, is in the following general terms:

a) Both parties acknowledge that the Museum’s successful operation

depends upon the exercise of their respective responsibilities in a spirit of goodwill and co-operation;

b) The Trust agrees to undertake the management of the Museum, and:

ensure that the curator is included in any discussions about principles or policy that affect the operation of the museum, including membership of the Museum’s management group;


obtain and maintain Museum Registration and any successor recognition;

prepare and maintain a five-year development plan and acquisitions

and disposals policy to be agreed by the curator on behalf of the Council;

ensure that the Museum is open for the longest hours possible, and

not to make any charge without the Council’s consent;

recruit, train and manage volunteers to do all those activities that are not the responsibility of the curator; and

insure the whole collection through the Council.

c) The Borough Council undertakes:

to employ a curator for the Museum, and to line-manage that person

and provide appropriate support services, and consult and agree with the Trust any matters relating to that post that might affect the operation of the Museum;

to meet the maintenance costs on the Museum building;

provide funding to offset the Trust’s running costs, the amount to be

determined annually, and to make a contribution to the costs of insurance that is proportionate to that part of the collection owned by the Council.

d) Both parties agree to abide by the Agreement insofar as they are able,

and:

the Council is not to be bound to make any particular financial contribution and that such support is always at its discretion; but

the Trust is not bound by the agreement if Council funding falls below

that provided in the 2000/2001 financial year. 1.4079 The Trust now bids competitively with other voluntary sector bodies for annual

grants: in 2004/5 the Council’s contribution was £2,500 under its 'Sponsored Organisations Scheme' plus £1,500, as a subsidy on rent payable on the Museum premises by the Trust to the Council; the Trust also receives 100% business rates relief at a cost to the Council of around £1,500. However, the Council also contributes in the order of £60,000 in indirect costs, reflecting not only the employment of the curator and the associated costs, but access to the council’s central services, including ICT.

1.4080 Exhibit 1.4.29 shows the pattern of income over the past ten years. It

demonstrates the Museum’s success at fundraising, and that it has been able



to generate sufficient partnership funding to secure support from external sources such as the Heritage Lottery Fund, Carnegie UK Trust, Esmée Fairbairn Foundation and others. This has enabled the refurbishment and redevelopment of the Museum building in 1998/99, the purchase of significant drawings by Gertrude Jekyll and others on a regular basis, and works to conserve and enhance access to the local history collections.

Exhibit 1.4.29: Income at Godalming Museum 1994 - 2004

1.4081 Over the ten year period:

taking into account both grant and services in kind it is estimated that the Borough Council has contributed less than one-third of the Museum’s direct funding requirement, both capital and revenue;

it has mobilised in excess of 100 people to make a regular contribution to

the Museum’s voluntary operation;

on the basis of the Council’s help in kind (including the direct provision of a curator) and core funding of £30,000, the Museum raised over £500,000 in grants and donations, 43% of which came from private donors and charitable foundations; and

raised in excess of £250,000 for capital improvements and acquisitions.

1.4082 Waverley Borough Council also operates the Museum of Farnham, which it

reviewed in 1997 to assess whether this might be another potential museum trust. The result was that it was decided to maintain the status quo.

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

110000

120000

130000

140000

150000

160000

170000

180000

190000

1994/5 1995/6 1996/7 1997/98 1998/99 1999/2000 2000/2001 2001/02 2002/3 2003/2004

Core funding Earned Income Grants Other

West Dorset District Council: Bridport Museum80

1.4083 Exhibit 1.4.30 provides key statistical information on the Bridport Museum:

Exhibit 1.4.30: Bridport Museum: Key Statistical Information Date of foundation 1932 Date of Devolution 2002

No of sites 2 Funding Agreement 4 year

Incoming Resources* £0.089 No of Trustees 8% of Turnover • No. nominated 0**

• Earned income 11% • No. nominated by core funder 0


• Core Grant 74% • Management committee Yes• Other Public Funds 13% • Audit Committee No• Non-Public Funds 1% • HLF funding No No of staff 2• Renaissance No • Costs % expenditure 55% Trading Subsidiary No Pension Scheme: • % Net Profit • Local Government Pension Scheme Yes • Defined Benefit/Contribution NoDesignated Collections No • Personal Pension No

2001 2002 2003# 2004 2005 Net Current Assets (£) 25,627 25,722 90,882 Total Assets (£) 25,627 25,722 90,882 • Restricted • Unrestricted 25,627 25,722 90,882

Visitor Numbers 4,016 6,358 5,528 6,410 * 2003/2004

#June 2002 – 31 March 2003; Latest accounts to 31/03/2005 **the trustees constitute a management committee with nominees of the district and town councils

1.4084 In 1931 Captain Alfred Codd purchased the museum building (The Old Castle) and donated it to the town to be used as a museum and art gallery. The Council also bought Codd’s art collection for a nominal fee of £20. It opened on 28th May 1932 and was administered by Bridport Borough Council until 1974, when it became the responsibility of what is now West Dorset District Council.

1.4085 In 2000, the Museum was refurbished and extended into what had formerly been the building’s coach house, which provided new accommodation for the museum’s library, office and reserve collections.

1.4086 In 1997 an independent review had recommended that Bridport Museum be transferred to a museum trust. Having completed the improvements referred to above, the Council transferred the management of the building, collections and staff to the Bridport Museum Trust, an independent charitable trust set up to manage the Museum. The trustees meet quarterly, but the day-to-day management of the Museum is in the hands of a management committee

80 Annual Reports & Financial Statements 2003- 2005; West Dorset District Council

Treasures in Trust (2002)


which includes all the trustees and two nominees of the District Council and two nominated by the Bridport Town Council.

1.4087 The arrangements for the Council supporting the Museum are based on Treasures in Trust, West Dorset Council’s museum support plan, which was adopted in 2004 and requires Service Level Agreements for four museums revenue-funded by the Council.81 Under its four-year Agreement with the Museum Trust the Council agreed to:

core fund the Museum on a base of £46,228 pa, to be increased by

inflation each year, subject to annual ratification for the forthcoming year by the Council each February;

provide additional funding of £12,000 in the first year, tapering by £4,000

each year so that by the final year this funding will have been discontinued;

treat the Museum Trust as eligible to apply for grants of up to 20% of cost

from its Leisure Development Fund;

provide general and business support the museum through its Officers.

1.4088 In return the Museum Trust is required to maintain its existing standards and activities, increase its earned income, expand its educational role and collaborate with the Council on some key priority areas. It is also required to report twice-yearly by providing performance information, and advise the Council of any material changes in its circumstances.

1.4089 The Museum employs a curator, part-time administrator and four seasonal assistants, and is supported by around twenty active volunteers.

York City Council: York Museums Trust82

1.4090 Exhibit 1.4.31 provides key statistical information on the York Museum Trust.

Exhibit 1.4.31: York Museums Trust: Key Statistical Information

Date of foundation 1823 Date of Devolution 2002 No of sites 4 Funding Agreement 5 years Incoming Resources £4.151 m No of Trustees 15% of Turnover • No. nominated 1• Earned income 44 • No. nominated by core funder 2• Core Grant 33 • Management committee Yes• Other Public Funds 6 • Audit Committee Yes• Non-Public Funds 9

81 the others being Lyme Regis Museum, Sherborne Museum and the Dorest County Museum 82 Cooper (2001); York Museums Trusts Annual Reports and Financial Statements 2002 -

2005; City of York Lifelong Learning & Leisure Plan 2005 – 2008

• HLF funding 6 No of staff 91• Renaissance 2 • Costs % expenditure 54 Trading Subsidiary Yes Pension Scheme: • % Net Profit 12 • Local Government Pension Scheme Yes • Defined Benefit/Contribution Designated Collections Yes • Personal Pension

2001 2002 2003 2004 2005 Net Current Assets (£) 434,932 323,140 553,072 Total Assets (£) 516,296 615,656 769,102• Restricted 41,844 41,844 34,340• Unrestricted 474,452 573.812 734,762 Visitor Numbers 500,094 442,606 395,000 426,000 350,918

Annual accounts to 31/03/2005

1.4091 York Museums Trust includes the Yorkshire Museums and Gardens, Castle Museum, York Art Gallery, and York St Mary’s. The first of these is the longest-established, being founded in 1823. Having moved into its present site in 1829, it continued to be operated by the Yorkshire Philosophical Society until 1961, when it was transferred to York City Council, which passed it on to the new North Yorkshire County Council on local government reorganisation in 1974. Following the City of York’s re-constitution as a unitary council outside the county in 1996 the Yorkshire Museum reverted to the City and became part of its museum service.

1.4092 The City Art Gallery opened in 1879; the Castle Museum was founded in

1934 to house the Kirk Collection of social history material, and opened in 1938. St Mary’s Church became redundant in 1958; between 1975 and 2001 it housed a heritage centre with a permanent exhibition – York Story. Until 1996 and the reversion of the Yorkshire Museum, admission income from the Castle Museum more than covered the total costs of the museum service, and the surplus helped defray the running costs of other council services.

1.4093 Visitor numbers to the Castle Museum had peaked in 1977 when almost 900,000 visits had been achieved, but by 2001 changes in the tourist market and public taste, as well as increasing local competition, had seen annual numbers decline to 325,000. During the 1990s this decline averaged 37,000 visits pa, leading to the need for additional expenditure of £120,000 each year merely to maintain the status quo.

1.4094 The consequent reduction in earned income had led to the museum service’s budgets being progressively squeezed over many years, and inward investment was limited and spasmodic. There was an imperative need to address building maintenance issues and to provide full access for people with disabilities, to modernise the product offered at all sites, become more visitor-focused, and to remedy inadequate collections management conditions



1.4095 A failed Lottery bid for the Castle Museum in 1997 targeted at reversing this trend acted as a catalyst for change. The Council recognised that it could not deliver change on its own, and that it required partners. During the period of review and reflection that followed it became evident that if the decline was to continue, there would be further reductions in performance and the costs of the service would rise. A Best Value review examined the options available in some detail, leading to the Council accepting the option that would lead to devolution to a museum trust. The decision was taken in principle in June 2001.

1.4096 The key elements of the devolution were to be:

the museum trust would be established as a charitable company limited by guarantee and would have, from the outset, a wholly-owned subsidiary trading company to undertake non-charitable trading;

it would take responsibility under lease for the York Art Gallery, Castle

Museum, St Mary’s Church and the Yorkshire Museums and Gardens, and two off-site stores occupied by the museum service, with two other stores occupied under licence;

the Council would assume responsibility for major building repairs that

interfered with the operation of the service until such time as the buildings were put in order with external funding;

ownership of the property and the collections would remain with the

Council, which would act as custodian trustee of assets that were subject to special trusts;83

its board would be made up of individuals with skills reflecting the

significance and range of the collections, and would include two nominees of the Council, and a nominee of the Yorkshire Philosophical Society (an early proposal for an individual to be nominated by the trades unions in consultation with the staff foundered under conflict of interest rules);

the trust would provide York residents with free admission to the core

collections (but not necessarily to special exhibitions);

the Council would make a ten-year financial commitment to the Trust based on a rolling five-year forward plan;

funding would be based on pre-transfer levels, increased with inflation,

and a triennial dowry would be provided to meet at least 80%, and not more than 90%, of the funding gap between the Trust’s predicted expenditure and the pre-devolution cost of the museum service;

the Council would also provide £1.9 million partnership funding for an HLF

application; and 83 assets held under specific charitable trusts; see para 2.426

the museum service’s staff would transfer to the museum trust.

1.4097 To progress matters the Council created an ‘initiation group’ of councillors

and individuals that had been identified as the core board members of the museum trust, supported by Council officers, and with a budget of £255,000. It was led by Robin Guthrie, a former Chief Charity Commissioner, with a distinguished record of public service. The Initiation Group’s tasks were to:

consult with stake-holders;

establish the museum trust as a legal entity, achieve charitable status,

and recruit trustees;

commission the transfer documentation;

prepare a business plan and ;

recruit a chief executive;

establish initial operating systems; and

consult with trades unions and staff, and initiate personnel policies for the museum trust.

1.4098 The Council formally agreed on 26 July 2002 that the transfer should take

place on 1 August 2002 on the basis of a funding package that included:

initial annual funding of £1.279 million, initially to run to 31 March 2008, to be increased each year by the Council’s budget inflation assumptions, with negotiations between the City Council and the Trust to start in April 2005 in respect of a bid for a further five-year period;

the grant to be payable quarterly in advance;

an initial dowry (for up to 31 March 2005) of £415,000 (with an option to

apply to the Council for further dowry beyond that date in June 2004).

the transfer of the Castle Museum donations fund (£163,000);

a Funding Agreement which included a Partnership Delivery Plan that

o described the arrangements for the Trust providing museum services, delivering outcomes within the Council’s key corporate objectives and setting out the obligations of both parties in making the partnership work;

o established the key targets for the museum trust in terms of the

Council’s Best Value Performance Plan;


o set out performance indicators and monitoring arrangements;

o empowered the Trust to represent the City Council in delivering museum services and to continue to advise Elected Members on museums issues.

1.4099 The museum trust’s proposed Business Plan was based on the following assumptions:

visitor levels stabilising at those of 2001, with ticket income rising at 2.5% pa from 2003 onwards;

increased income from retail (£50,000 pa) and catering (5% pa);

increasing income from temporary and touring exhibitions by £100,000

over a five-year period;

increasing school visits to the museums;

achieving income from new sources (particularly from building hires and lettings) of up to £50,000 by 2006/7;

investing in collections management, increasing staffing by a collections

manager and 1.5 fte conservation posts;

preparing an £8 million bid to the Heritage Lottery Fund; and

investing £300,000 in marketing and exhibitions by 2006/7. 1.4000 The costs of establishing the museum trust were approximately £110,000,

leaving a balance that was to be spent on additional legal fees and financial software (£50,000) and £95,000 to meet any future pensions, early retirement or redundancy costs that might be incurred in the trust’s early years.

1.4101 The transfer took place, as planned, on 1 August 2002, 14 months after the

Council had agreed in principle to the devolution, and two years after the start of the Best Value Review that examined the available options. A public launch took place on 4 October.

1.4102 Since that date the Trust has achieved the following:

development of its organisational and operational structures and improved collections management;

the introduction of a Lifelong Learning programme for schools and

families;

securing almost £2.5 million from external funders for development and activity-based projects;


refurbishment of the York Art Gallery;

refurbishment of concourse at the Castle Museum;

a number of substantial collection-based exhibitions in York galleries,

which have also been toured outside the City;

the redevelopment of St Mary’s Church as a gallery for contemporary art;

secured almost £2.5 million from external funders for development and activity-based projects; and

shown a number of substantial exhibitions in York galleries, and toured

beyond. 1.4103 While these first steps are encouraging, it cannot be expected that long-term

decline can be turned around overnight. Despite early signs of increasing visitor numbers, satisfaction amongst local residents in 2004/5 was ten points lower than in 2002/3 (though there was slight trend to reducing the number of those actively dissatisfied).

1.4104 York’s initial experience has been that capital investment is a prerequisite for

increasing satisfaction, as is evidenced by the large increases in visit numbers to the York Art Gallery, and visitor satisfaction levels, since its refurbishment. in 2005.


CHAPTER 1.5: Lessons Learnt & Issues Raised General Characteristics 1.501 The evidence provided in the previous chapter and as a result of consultation

suggests that the following experiences are of general application:

a) The process of change re-energised the museum – the upheaval associated with change, though sometimes difficult, had the benefit of introducing both new people and ideas that revitalised existing performance and future ambitions.

b) The stability and sense of direction enabled effective strategic planning – even where there was no long-term funding guaranteed, the existence of a formal statement between the council and the trust created a long-term expectation of partnership working;

c) Additional resources were brought into the museum not only on transfer but consistently thereafter. While for some the local authority core support continues to be high, for many that support is less than half their income.

d) The change enabled the museum to make new connections and

partnerships that are relevant to the museum rather than the organisational priorities of the local authority.

e) Once devolution has taken place, it tends to endure, with some arrangements now approaching their third decade,

f) Rarely is there a substantial financial saving to the devolving local

authority, though most transfers take place from a low base, and better value for money is achieved.

g) Most of the additional funding that has been gained is from public funds

that are open to all, and very little has been done to cultivate personal or corporate giving, and maximise the non-fiscal benefits of charitable status.

It is RECOMMENDED that museum trusts develop long-term strategies to cultivate private and commercial donors to supplement funding from public sources. h) There can be disappointment with the level of bureaucracy associated

with operating the museum trust, which was expected to decrease from that of a local authority (though this is, in part, a reflection of the requirements of external funders).

i) Transfer to a museum trust is no guarantee that a museum will be better

governed or managed than in a local authority, notwithstanding any of the above achievements.


The Review Process

1.502 The review and implementation process can cause concern and uncertainty not only for staff but for the museum’s stakeholders, including the local public. The museum also suffers planning blight until a decision is reached. There should be a duty of care to ensure that the review process, and the decisions that come out of it, are speedily executed.

1.503 A number of consultees, who have gone through a recent process in which

change was anticipated but did not materialise, believe that the issue will be returned to before the next Best Value review five years hence. The resources consumed by such reviews make regular repeat exercises undesirable.

1.504 It appears that devolutions are most commonly followed through when there

are champions in the museum service, at senior corporate management level, and within the political leadership. While not all need to be enthusiasts for devolution, at least two are essential if the process is to be taken forward. External pressure is also likely to be influential, one way or the other.

1.505 The review has to balance the benefit to the museum against that of the

council’s corporate interests as a whole. The two may not be identical. However, to rule out devolution merely to maintain the current size and scale of the corporate centre is not a valid reason for rejecting devolution. The case needs to be judged on tangible public benefit rather than administrative convenience.

It is RECOMMENDED that: (1) there should be five clear years between the end of one review and the

start of the next, and that reviews should be conducted in a timely way that places the minimum disruption on services; and

(2) reviews should be thorough, strategic assessments with terms of

reference that take into account all those factors associated with best value and improving customer service, not merely financial savings, and that identify both cashable and non-cashable efficiencies; and

(3) the results of reviews should be published, and the reasons for the

option selected, and the evidence that led to that conclusion, clearly stated.

Culture/Leisure Trusts 1.506 Some museums have been transferred, or are being considered for transfer,

to ‘culture/leisure trusts’ which embrace a wider range of cultural activities. Generally, such arrangements risk transplanting the difficulties that museums have faced within local authorities due to their smaller size, which makes it difficult to compete with other functions (especially where these are statutory) for resources. Indeed, since a prime mover for culture/leisure trusts is to


reduce service costs while securing their improvement, the risk of a museum budget being squeezed increases. Further, that the trust represents a distancing from the council’s political leadership makes lobbying on the museum’s behalf more difficult.

1.507 Getting Wigan Active, the strategic plan of Wigan Leisure & Culture Trust

(WLCT), which was created in 2003, includes the closure of the town’s museums of Victorian life, The Way We Were, and the Museum of Memories, the home of the Opie collection of advertising and packaging, which has moved to London. Wigan Pier, the location of those museums, is being redeveloped to include apartments, restaurants, a hotel and other leisure and visitor attractions.

1.508 WLCT plans to develop Trencherfield Mill (which houses the world’s largest

original working mill steam engine) with a new 500 seat performance space, which will host the annual Wigan International Jazz Festival, a café, bar and restaurant as well as loft apartments. Underpinning the strategy is the belief that the future of Wigan Pier lies in a gradual move towards a cultural quarter for the 21st century rather than a series of backward-looking heritage attractions. In the future, heritage provision will be based on the History Shop, located in the town’s former library, which includes a permanent display telling the story of the Wigan area from its earliest times, an art gallery, a temporary exhibition gallery, a study area for genealogists and local historians.

1.509 Gunnersbury Park Museum, the responsibility of the Gunnersbury Park Joint

Committee of Hounslow and Ealing Councils, has been managed since 1998 by CiP, Hounslow’s culture trust, which was one of the first of the type. Dissatisfaction over the lack of progress in developing the site has led to the joint committee considering a change of governance and management arrangements, which may ultimately lead to a not-for-profit trust for the Park and Museum.

1.510 While the initial experiences of culture trusts has indicated that this can

present a more difficult route for museums, the risks are not automatic, and can be mitigated if addressed during the process of planning for change. However, they do need to be recognised at the earliest opportunity.

It is RECOMMENDED that, in considering transfer of museum services to culture trusts, the proposed arrangements should provide both local authorities and their museums with an equivalent or greater advantage than would come from dealing with services on a separate basis.

The Legalities of Transfer 1.511 The cases examined demonstrate a huge difference in the scope of legal

documentation associated with devolution, and as a consequence the costs incurred in making the change. In broad terms, legal arrangements followed two approaches:


a) Simple documentation, which anticipates that future problems can be solved as they arise. Typically these are simple funding agreements endorsed by respective minutes of council and trust and, where appropriate, leases of property. As the council has greater resources at its disposal, this arrangement gives it a stronger position in the resolution any disputes.

b) Comprehensive documentation, including a family of funding, transfer,

loans and management agreements, with associated leases and licences. These address potential difficulties in advance of their arising, and therefore provide a greater degree of equality between council and museum trust.

1.512 Generally, local authorities retain ownership of the collections (which are

loaned to the museum trust) and buildings (which are leased to it, or which it is licensed to occupy). Following devolution, the museum trust’s assets can only be used for the charitable purposes specified in its governing instrument or transferred to another charitable body for similar purposes. Reversibility, though possible, can be difficult and protracted. The only form of transfer of the museum trust’s property to the Council on its winding up would be in the form of a charitable trust. Thus where grant funding is withdrawn, or the museum trust gets into financial difficulties, speedy resolutions can be hard to achieve. Clarity in the terms of transfer will help to minimise such difficulties.

1.513 However, even where transfer arrangements have been fully documented, in

some cases it has been necessary to revisit those Agreements. Often the need is to more fully bind the council into obligations to maintain the capital assets in which external investment is being sought, whether from Lottery or other sources.

1.514 The legal complexities and costs associated with transfer represent a

substantial deterrent to local authorities considering devolution. Costs would be reduced by the availability of model documentation which could be adjusted to local circumstances, but which would avoid the levels of briefing and enquiry presently necessary. While legal advice should always be taken on both sides (council and museum trust), there seems little point in public funds duplicating expenditure on the routine matters that almost always constitute the bulk of the transfer arrangements.

1.515 Where devolutions have occurred as a response to community pressures to

save a museum or improve its services, especially where it is a branch of a larger service, the agreements tend to enable the council to maintain a greater degree of direction and control. They tend to include indefinite durations, annual funding, short termination periods and define only vaguely the default situations that would allow the council to terminate the arrangement. It may be that, in some cases, the enthusiasm to take over the museum blinds the pressure group to the real implications of the agreement. The Charity Commission takes the view that a charity should expect its



expenditure to generate a proportionate benefit, which works against museum trusts investing substantial resources on the basis of short-term agreements.

1.516 Such provisions may reflect nervousness in the local authority about the

decision to devolve (especially where this was a political response rather than a matter of strategic policy), or about the capacity and capability of the museum trust and its board members. In a minority of situations, it could be seen as the council consciously increasing the potential for the museum trust to fail, thereby justifying its previous actions.

1.517 In general, the greater the council feels the need to mitigate its risks or retain

control, the greater the risk that the devolved arrangements will not fulfil their potential, or even proving unsustainable. Real partnerships rely on mutual trust and sharing risk equally. If this balance is not evident in the agreement, or represented in day-to-day working practices, arrangements are less likely to endure.

It is RECOMMENDED that the relationship between councils and devolved museums should be encapsulated in a formal legal document that: (1) has a defined term of not less than three years; (2) indicates the funding that the council will make available throughout

that period, and when and how it will be paid; (3) defines the services the museum trust will provide in return for the

grant, and how this is to be reported to the council; (4) specifies any obligations on the council (eg building maintenance and

meeting insurance costs); (5) defines in precise terms the defaults on both sides that would lead to

termination before the end of the agreement, indicating where liabilities would lie; and

(6) agrees the process at the end of the agreement, whether a timely

negotiated renewal procedure, or failing that a reversion to the council at its cost.

It is FURTHER RECOMMENDED that MLA commission model documentation (including governing instruments, funding, transfer and collections agreements). So to do would relieve the costs on public funds, facilitate the process of implementation, and embed good practice.

The Voluntary Sector Compact 1.518 The Compact,84 signed in November 1998, is a written understanding between

the government (with cross-party support) and the voluntary/community 84 Home Office (1989)

sector, and sets out a framework for their relationship. The national agreement is reinforced by Local Compacts (based on Local Compact Guidelines) adopted by councils and other local public bodies. The Compact incorporates a number of codes of good practice, including on funding and procurement. It advocates that core funding should always be on a full cost recovery basis, with multi-year roll-forward funding.

1.519 While the Compact is well known in community and social services departments, it is less well-known in the cultural domains. Where hybrid or smaller museums are being devolved, it provides a useful model to develop funding arrangements that match local circumstances.

It is RECOMMENDED that all relationships between councils and museum trusts comply with The Compact on Relations between the Government and the Voluntary and Community Sectors, and its counterpart Local Compacts...

Partial Transfers and Hybrids

1.520 There have been a number of examples where operational responsibilities for museums have been devolved, but staff have been retained within the local authority and seconded. Where this has happened it has generally worked well, but it should be noted that this arrangement limits the museum trust’s flexibility and responsiveness over a key resource issue. While it provides a sense of comfort for staff (and perhaps also for trustees), it does diminish the full potential of change, and shackles the trust to terms and conditions of employment that may not be in its best interests.

It is RECOMMENDED that partial transfers only be considered in exceptional circumstances where some irresistible factor precludes full devolution.

Funding Agreements and Timeliness 1.521 Normally, substantial amounts of time and effort go into developing initial s.

However, in some of those that have a life of five years or more, the process of review and revision extends well beyond the termination date. In a few cases Agreements have never been formally renewed and, as a consequence, five-year funding cycles have become replaced by annual awards, with the remaining terms becoming, by default, a memorandum of understanding rather than a formal Agreement.

1.522 In none of these cases has this led to the devolution being rescinded and

trustees have no doubt felt that the bundle of Transfer Agreements, leases and collections loan agreements provide adequate security for the museum trust’s continued operation. However, in the longer term, this approach risks the strategies of the museum trust becoming disconnected from those of the council, on which the justification for its financial support depends. The discipline of working to an agreed timetable for renewing s is an intrinsic element of this form of partnership, and the aim of concluding appropriate



negotiations in a timely manner, and then promptly executing the Agreement, should be embedded in the relationship.

The Change Process 1.523 Once the decision to move forward has been taken, other decisions need to

be taken speedily. A set-up budget is essential, and it should be recognised that the Shadow Board will need to take its own advice, and negotiate with the council as a serious partner,

It is RECOMMENDED that, where local authorities agree to devolve their museum services, sufficient resources should be made available to ensure that the ‘Shadow Board’ of the new museum trust is able to access its own advice and support, and that the council should indemnify the members of the Shadow Board from any liability that should arise as a consequence of the devolution not taking place.

1.524 Exhibit 1.5.1 illustrates a typical change process, which is in a form appropriate to devolution arrangements. It starts with the implementation group/Shadow Board’s role in: Exhibit 1.5.1 A Change Process

Mission/ Vision/ Values

Strategy / Objectives

Business/Service Proposition

Business/Operating Model

Structures (Functional, Area etc)

Roles (Accountabilities etc)

Systems (Performance/rewards etc)

Processes (Induction, training etc)

Skills (Core business competence)

Behaviours (Ways of working)

Attitudes (Motivation, commitment etc)

Styles (Management, culture etc)

‘Hard issues’ ‘Soft issues’


establishing a mission and values for the museum;

defining its initial strategy and objectives;

formulating its ‘business proposition’ – what will distinguish this museum from others; and

creating an operating/business model – the means by which the business

proposition will be delivered. 1.525 The steps that follow from this initial work look at more practical issues. While

many processes of change are strong on the ‘hard issues’ of structures, roles, systems and processes, the equally- important ‘soft’ areas can sometimes be overlooked, and some consultees gave examples where this had clearly been an issue.

1.526 Exhibit 1.5.2 summarises consultees’ key views on change. As these reflect

Kotter’s Change Model,85 the Exhibit uses this as its framework: Exhibit 1.5.2 Actions Necessary for Successful Change

Steps Pre- Devolution Post-Devolution 1. Establish a sense of urgency Through Review

process: o identify crisis

areas and opportunities

o introduce external evidence that change is necessary

2. Create a Guiding Coalition Assemble Shadow Board with sufficient influence and authority to lead change effort

Council and Shadow Board show enthusiasm and commitment to change

Council and Shadow Board work together as a team

85 Kotter (1995)

Steps Pre- Devolution Post-Devolution 3. Develop a vision and

strategy Shadow Board

o creates vision to help direct change effort

o develops strategies to achieve that vision

4. Communicate the changed vision

Shadow Board uses every opportunity to communicate new vision and strategies

Communication kept simple and genuine Shadow Board establishes new behaviours

by example 5. Allow employees to take

broad-based actions Obstacles to

change removed Structures

incompatible with vision reformed

Systems or processes that undermine vision discarded

Risk-taking and non-traditional practices and actions encouraged

6. Create short-term wins Performance improvements planned

Improvements created

Personnel involved in improvements recognised and rewarded

7. Consolidate change and move forward

Performance improvements planned

Improvements achieved

Personnel involved in improvements recognised and rewarded

8. Anchor new approaches in organisational culture

Connections between organisational success and new behaviours explained

Means to ensure leadership development and succession developed



1.527 Throughout the transfer process effective communication with the staff and their trades unions is essential. This should recognise that not everyone needs to be committed to the changes: understanding what the change means will be sufficient for many. Levels of understanding needed by each member of staff should be identified in advance and communication events designed accordingly.

1.528 Beyond any statutory requirements, it needs to be recognised that change of

the scale required will be disruptive. Experience tends to follow the J-curve in Exhibit 1.5.3

Exhibit 1.5.3: The J-Curve of Change

1.529 Immediate improvements in performance and morale following the start of a

change initiative are rare. The normal situation is for a drop in morale and performance, followed subsequently by improvements until the desired performance/morale is achieved. The success of a change initiative is judged in terms of how short a time is taken to achieve the result, and how little performance drops in that process. Thus the J-curve associated with successful change tends to have steep profiles; those that are unsuccessful, rift valleys.

1.530 Generally, the experience of devolved museums has been positive, with

performance and morale achieved within short time spans. Inevitably, the process has led to some staff changes, and these have not always been easy, but the pain was generally short-lived, and usually ameliorated by generous redundancy settlements including, for workers aged over 50, early pension payments.

1.531 Generally staff who have transferred express a positive response to the

change, feel a greater sense of direction and benefit from additional resources being available and the job satisfaction that comes with a lively institution. Where a two-tier workforce exists, with new starters employed under different terms and conditions to transferred employees, it appears the

Perf

orm

ance

& M

oral

e

Time

Current State

Desired State

Planned

Change Initiative

Good Outcome

Poor Outcome

differences are not so great as to cause disharmony or ill-feeling. The two key areas of disappointment experienced, and these in only a few isolated situations, are:

the hopes for less paperwork have been frustrated, with the creation of a

new bureaucracy by the museum trust which takes over from that of the council (though this often derives from external funders’ requirements to provide information that justifies their expenditure on the museum, and is outside the museum’s control); and

the belief that, post-devolution, some incoming senior management

regard transferred employees as being associated with a failing service, irrespective of the past efforts of those staff to maximise activities and to maintain high standards.

Boards and Trustees The Chair 1.532 Appointment of the chair is a key initial step. In some cases they have come

from a business background, in others from the public sector. Their experience has been invaluable in mentoring newly-appointed directors who come to the post with no previous experience as a chief executive. A key requirement for the first chair is the time and commitment to manage the transition and the first years of the museum’s operation. While breadth and diversity are important, the vital initial requirement is that the first board members should be able to work as a team with the chair.

1.533 Where a local authority nominee has been appointed as chair it has tended to

convey a perception of council control, which has worked against the museum establishing itself as a significant local cultural institution. In some cases this has lulled the board into a false sense of security over the council’s capacity to bail out the museum trust should it come into difficulty. The occasional practice of changes in a council’s political control leading to replacement of board members (including chairs) is bad practice, as it compromises the independence that is fundamental to charitable status and creates a perception of the museum trust being the council’s poodle, which may compromise support from other sources. Other mechanisms for accountability that are available.

It is RECOMMENDED that local authority nominees to boards of trustees, or chairs of museum trusts who are local authority nominees, should not be replaced on a change of political control in the council, and should serve the remainder of their full term of office. Accountability should be exercised by other means, such as Funding Agreements..



Board Size & Committees86

1.534 The representational nature of many museum trust boards requires that they

are larger than their business counterparts. Yet large boards often bring difficulties. The people appointed tend to have many other interests and full diaries, which leads to board meetings being no more regular than quarterly events. Thus a single absence can remove a board member from active participation in the museum’s affairs for up to six months. The larger the board, and the less frequently it meets, the more difficult it is to have candid, structured and informed deliberations.

1.535 Such difficulties are often addressed by the creation of a small committee of

the board which meets more regularly, and is empowered to deal with business between board meetings. Yet legally the whole board is responsible for the governance of the organisation, and such committees risk the creation of a ‘them and us’ situation, with the committee members heavily involved and knowledgeable, but the remainder of the board uninformed and perhaps feeling marginalised.

1.536 In these situations board meetings can be little more than a forum where the

committee’s decisions are reported. Board members other than those on the committee can feel discouraged, and feel they have little to do but applaud or grumble.

1.537 Another much-used alternative has been to create a structure of supporting

committees, each reporting to the full board. Each board member would be allocated to a committee. It is argued that overseeing key development and operational areas can be a useful means of engaging board members in a museum’s work, and improving their knowledge of its activities.

1.538 Beyond the desirability of audit and nomination committees (the former often

coupled with remuneration committees established to resolve payments to senior management), the case for other committees is less persuasive. The benefits of increased participation can often be offset by fragmentation of effort or, unless there is regular rotation of committee membership, committee members losing their broad perspective and becoming champions for a single area of activity. In any case, the successful operation of a committee structure inevitably increases the proportion of resources deployed in administration rather than delivering programmes.

1.539 In most cases the disadvantages of both executive and supporting

committees will make them second-choice to a small board of fully-engaged members. While it is possible to mitigate the disadvantages of a larger group, it is unlikely that it can ever replicate the effective working relationships and team spirit that can be developed in smaller boards.

86 Babbidge (1998)


It is RECOMMENDED that the governance of museum boards should rest, in practice as well as constitutionally, in the hands of the board as a whole, and that board composition and membership should be planned to enable this to happen.

1.540 Whatever structure is adopted, the need for high-quality and effective corporate governance should be recognised from the outset and appropriate structures put in place. It is desirable that all boards should have a Corporate Governance Policy document87 which should include at least:

a) the museum trust’s mission statement;

b) its governing instrument;

c) a description of board members’ roles and duties;

d) terms of reference for committees and working groups;

e) how decisions are taken;

f) how the board reviews its effectiveness and appraises its performance;

g) how policy is set and performance reviewed;

h) accountability to funding bodies and the wider community, and relations

with stakeholders;

i) risk management;

j) equal opportunities and inclusion;

k) conflicts of interest; and

l) relations with stakeholders. 1.541 The role of audit committees has become more important in recent years. In

some cases these are combined with other financial planning functions. The practical implications of this can often compromise their role in scrutinising the conduct of an organisation’s financial affairs. It is beneficial if the role of the audit committee is limited to appointment of external auditors and superintending or undertaking internal audit functions. Such committees should not be compromised by prior actions or knowledge, so they are best made up of board members with no other responsibilities, and office-holders (such as the chair or treasurer) should not be members.

87 In 1995 the (then) Department of National Heritage funded the Committee of Area Museum

Councils to produce a framework folder for such a policy. 5,000 copies were distributed to museum trustees throughout the UK. Unfortunately, the initiative was never followed through, and the intended regular updates produced. However, it remains in print (Babbidge, 1995).

It is RECOMMENDED that all museum trusts should have audit committees to scrutinise both audit arrangements and financial processes/systems within the museum trust, and the members of such committees should not include office-holders.

Board Recruitment 1.542 There are mixed views about the effectiveness of recruiting board members

through open competition, and on whether this process discourages suitably experienced and qualified people from coming forward to fill what is an unpaid appointment. In some cases the board has been extended and strengthened by this means, in other cases the results have been disappointing. However, the latter may be a consequence of how and where the posts were marketed and presented. A nomination committee of board members can be an effective means of managing a continuing search and recruitment process for new members.

Board Remuneration 1.543 In recent times the Charity Commission has accepted that charities that are

also government-funded public bodies may remunerate trustees where the payments are reasonable, both in relation to the services rendered and to the income of the charity. This is on the basis that the funds used, though technically charitable rather than public funds, originate from monies voted by Parliament rather than from private individuals. It is also argued that this not only secures the best candidates, but advances equality of opportunity in broadening board composition.

1.544 The Commission also has recently approved arrangements that enable a

charity board to include several paid members. The Northampton-based St Andrew’s Group of Hospitals’ creation of a ten-strong board, comprising five unpaid non-executives, and five paid senior executives, is a case in point. This may reflect a growing acceptance that the business model of governance, with boards having a mix of executive and non-executive members, is appropriate for service-providing charities, with the Charity Commission being more amenable to such arrangements where they can be justified as being in the best interests of the charity, and where there are sound processes to deal with conflicts of interest.

1.545 A growing number of precedents suggest that remuneration of key trustees,

and employees serving on the board, are both issues that should be explored in future moves to museum trusts, for the following reasons:

the arrangement between councils and museum trusts are analogous with

those between government and its charitable funded bodies, where remunerated board members are becoming more common;


fair and proportionate remuneration of non-executive board members might enlarge the pool of high-calibre potential board members, as well as encouraging greater diversity and participation from all sections of the community; and

operating/business models being developed by larger museum trusts are

such that a mix of executive and non-executive board members represents the most appropriate means of governance.

Recruitment of Directors/Chief Executives 1.546 The appointment of the chief executive is critical. Running an independent

museum is very different to managing a local authority service. Recent years have seen long-running (but largely) sterile arguments as to whether leaders are born or made, and initiatives such as the Clore Leadership Programme to better equip individuals to manage modern cultural institutions. Valuable though such initiatives are, they pre-suppose the skills criteria used in recruiting for museums at entry level are likely to recognise people with the acumen, temperament, aptitude and confidence necessary to run what is, in effect, a small business. Job descriptions, experience and anecdote suggest that basic business skills are not sought on entry into the sector, and that it is hard to build confidence in those areas (rather than in generic public sector management skills) later in people’s careers.

1.547 The consequence of this is that the pool of people with the wherewithal to be

effective chief executives of museum trusts is limited. The smaller devolved museums should be the breeding ground for the next generation of directors of larger institutions, but this does not appear to be the case. Were there to be a substantial expansion of museum trusts it is by no means clear that the appropriate calibre of staff would be available to fill those vacancies. In these circumstances it is likely that trustees of devolved museums would look, as have those of other independent museums in the past, outside the museum domain for the leadership they require. It is RECOMMENDED that MLA should investigate whether the nature of entry-level job descriptions and specifications discourage people with the aptitude, skills, temperament and acumen necessary to manage museums on a business-like basis.

Relationships with Core Funders

1.548 In seeking to establish a new local identity it is easy for the museum trust to extend its arm’s length relationship with the Council to its extreme extent. It is remarkable how few annual reports of devolved museum trusts acknowledge the Council’s contribution, let alone record it as a discrete entry into the accounts.

1.549 The risk is that over time the Council and museum can become detached. Indeed, if the devolution proves to be successful, it can lead to jealousy from



both Elected Members and Officers, who can see the museum trust as something of a cuckoo in the Council’s nest.

1.550 Rather than drift apart, the relationship needs to be given work and effort. While regular reports to Council committees, cabinets and/or lead members are important - as is regular liaison with relevant Council officers - opportunities for informal contacts and briefings appear to be vital.

1.551 However, formal reporting to the core funder is essential, and this should take place at least once a year. It is also important that the museum trust’s accountability is discharged by the chair, on behalf of the board, and supported by the chief executive, rather than by the chief executive, on behalf of the Board, supported by the chair (or even by the chief executive alone).

1.552 Those devolved museums that are Non-Departmental Public Bodies (NDPBs) operate under the rules of Government Accounting88. This requires that a person (an ‘accounting officer’) be appointed by the funding department to be accountable for the operations of an organisation and the preparation of its accounts. By convention, this is usually the chief executive, who reports to the funding department’s accounting officer (usually its Permanent Secretary) and then to the Treasury Officer of Accounts.

1.553 The consequence is that these arrangements lead to parallel (and potentially conflicting) arrangements for accountability, with the chief executive ultimately responsible as accounting officer for the funds voted by parliament, and the chair and trustees responsible for museum’s charitable funds and assets. In recent years the situation where s are signed by Ministers on the one side and chairs on the other, further muddies the waters of accountability.

1.554 The practical difficulties associated with such arrangements have been accommodated by convention over the years (though, perhaps, not always to the benefit of good governance). However, in other circumstances it would be unfortunate if the ‘accounting officer’ regime were to be employed, whether as part of a local authority’s accountability regime, or unconsciously through custom and practice. So to do would risk the board becoming little more than a cipher, with the consequence of the chief executive acting beyond the powers of delegation in the museum’s governing instrument.

It is RECOMMENDED that all museum trusts have formal schemes for reporting their work to their sponsoring council, and that responsibility for discharging this role should fall on the chair and board (with the chief executive in support) rather than on the chief executive and senior management acting on behalf of the board.

88 HM Treasury (2000)


Annual Reports

1.555 All museum trusts will fall within the categories of charity required to produce an annual trustees’ report and financial statements. 89 Some also produce, as an advocacy document, annual reviews that abridge the key elements of the annual report and summarise the annual accounts.

1.556 Charities’ annual reports and accounts are becoming increasingly important. In the past they have often been seen solely as internal documents; today they are the front end of transparency and accountability. They are all published on-line by the Charity Commission, trawled for the basic information published by Guidestar UK90, and are increasingly used as a key source of information by potential donors, funders and interested members of the community. If the experience of other countries (particularly the United States) is followed, they will also be used to guide private giving.

1.557 The publication of the Statement of Recommended Practice: Accounting by Charities (SORP) (the latest edition of which was published in March 2005) specifies key guidance and requirements not only for the accounts and their support notes but also for the trustees’ report. This document is seen as an integral part of the annual accounts, in recognition that numbers cannot alone explain what the charity has done (its outputs), achieved (its outcomes), or what difference it has made (its impact).

1.558 Although most reports/accounts follow the general requirements of the SORP, many museum trust accounts are uninformative. Some museum trusts produce annual reviews that are ‘glossy’ publications with a limited circulation that are used more as advocacy documents than sources of information, and include only summary financial information. While they have their uses, they are no substitute for the full report and accounts. Yet frequently annual reports:

do not provide key performance information, such as visitor numbers, or trends over recent years and targets for the future;

contrive to understate the costs of governing/managing the charity;

provide no profit and loss account (where trading is a substantial element

of income) that takes into account the values of stocks held and overheads consumed;

fail to indicate which (if any) board members are nominated, or by whom,

nor whether or not there is an audit committee, nor (where there is an executive committee), its membership; and

89 Charities Act 1993 s 49; Charities (Accounts & Reports Regulations) 1995 SI 1995 No.

2724 90 an independent charity that provides an online source of detailed information about every

charity and voluntary organisation in the UK – www,guidestar.org.uk

do not acknowledge core funders, state whether or not there is a and (if so) what are its key requirements.

1.559 Sometimes key issues are dealt with in a way which creates the impression

either that there is something to hide, or that, more likely, the museum trust is thoughtless in these matters. Neither is likely to commend the organisation to potential supporters.

It is RECOMMENDED that all museum trusts, in meeting the requirements of

the Charities SORP, provide key performance information in absolute terms, and indicate trends over recent years. It is further RECOMMENDED that DCMS and MLA produce guidance on the reporting and accounting requirements related to the SORP, with the intention of providing common practice that enables greater comparability between accounts.

Publication of Information

1.560 One of the aims of the Freedom of Information Act 2000 was to develop a culture of openness in government and public bodies. Although devolved museums fall outside of the scope of the Act, their nature, purpose and relationship with the local authority (which is subject to the Act) suggests that, voluntarily, they should consider developing Publication Schemes that take forward the spirit of the Act.

1.561 At the very least, and in addition to the statutory access through the Charities and Companies Register, websites of devolved museums should:

a) provide details of the museum trust’s status as a charity and (if appropriate) a company;

b) list the museum trust’s current serving board members; c) reproduce the trustees’ report and full audited accounts of the museum

for recent years; d) summarise the key requirements of the museum trust’s with the local

authority; and e) summarise (insofar as this does not breach the normal conventions of

commercial confidentiality) the museum trusts’ forward/business plan for the coming period.

1.562 Where museum trusts do not have associated Friends or membership bodies,

annual open meetings that allow the board to describe the trust’s achievements during the previous twelve months – and enabling feedback and views from the floor - can be helpful in reaffirming links with the community.



It is RECOMMENDED that all museum trusts should encourage a culture of openness and follow good practice in providing public access about the relationship with their sponsoring local authority, their governance and performance using their website, and through other means, to disseminate such information.

Pensions

1.563 Against the background of contemporary debates about the future of both public and private sector pensions, this area represents a major challenge for devolved museums. Pension benefits are extraordinarily expensive, especially for small organisations. Most staff in local authority museums will be members of the Local Government Pension Scheme (LGPS), a final salary scheme that provides premium benefits, and public sector pension schemes such as this (though becoming increasingly uncommon in other sectors) still provide the yardstick for museum pension arrangements.

1.564 Although museum trusts may be permitted to participate in LGPS, there is no automatic right of entry on devolution. Staff transferred under such arrangements are, under the government’s Code of Practice91, entitled to admission to a high-quality pension arrangements, though the benefits of these schemes do not need to be exactly comparable with those of LGPS.

1.565 The practice of some museum trusts has been to secure continuing LGPS membership for transferred staff, but to put in place alternative arrangements for new employees. As these have provided fewer benefits than LGPS, the consequence has been an immediate saving on the trust’s payroll costs.

1.566 On this experience, when considering pension arrangements for new museum trusts the following issues need to be considered:

a) The place of pensions in a rounded remuneration package, where

pension rights are balanced by other benefits such as higher pay. b) The reputational risk associated with moving outside LGPS or an exactly

comparable scheme; the good-quality pension scheme required by the government’s Code of Practice may well not match the LGPS scheme, leading to the perception that funds previously used to provide employee benefits have been diverted to meet operating costs. This would be a particular problem where the pay of senior staff is relatively higher than their counterparts in other museums, while the pay of junior posts appears no more generous than is typical in what is (generally) a poorly-rewarded workforce.

c) The risk that recruiting middle managers from other parts of the public

sector will be less successful if they find they cannot transfer their LGPS pension into a scheme that will continue to contribute to their benefits.

91 Code of Practice on Workforce Matters in Public Sector Contracts (2005); see also paras

2.475 – 2.479

This can only be ameliorated by higher salaries, enabling the employee to have freedom of choice over pension arrangements, but the impact of this may well match any savings made through moving out of LGPS.

d) The long-term implications of closing LGPS to new employees after

transfer. The pooled basis on which pension funds operate provides, through actuarial revaluations, the ability to balance shortfalls on contributions from longer-serving members with those from younger colleagues. Thus closure of LGPS to starters removes any new contributories, and the employer becomes responsible for all the costs associated with the existing members, both before and after retirement. This can represent a substantial commitment, and any short-term gains from cheaper contributions to other schemes can be negated by deficiency payments continuing in the longer term.

e) The operation of an employer-specific own pension scheme is not a

simple process, and devolved museums are unlikely ever to be in a position where they can afford their own tailor-made arrangements, with pension scheme trustees supported by an actuary, accountant, lawyer, fund manager and administrator. The only alternative is to join a scheme operated by a commercial provider, or to collaborate with other employers to develop a common scheme, on the pattern of those run by the Pensions Trust, a mutual organisation that provides a range of pension schemes for the charitable, social, educational, voluntary and not-for-profit sectors.

1.567 Consultation revealed that some employees recruited by museum trusts,

especially those that had moved out of posts covered by LGPS, feel that the pension implications of their move had not been sufficiently explained. Clearly, pension arrangements are fundamentally a personal responsibility, but that does not exonerate the employer from providing sufficient information to enable employees (or potential employees) to understand the pension arrangements being offered, to enable an informed decision to be made.

It is RECOMMENDED that: (1) all museum trusts that adopt pension schemes other than the LGPS

should provide full details of their scheme within job information packs sent to all potential job applicants, indicating how it differs from LGPS; and

(2) the Museums Association and Association of Independent Museums

should investigate the viability of a multi-employer pension scheme, whether operated by the Pensions Trust or a commercial provider.

Networking

1.568 While museum trusts generally appear to play a more active role in museum networks than their local authority counterparts, it appears that this does not


include a regular communication between themselves as devolved museum trusts. There is no counterpart to SPORTA, which connects the operators of leisure trusts.

1.569 While the museum domain is probably already too fragmented into special interest groups to require yet another, it does seem that there are opportunities for informal exchanges of experience, and discussion of policy issues that are primarily relevant to devolved museums, such as the pensions issues referred to above. Perhaps it would be most appropriate for an existing body – whether the Museums Association or the Association of Independent Museums – to facilitate this.

It is RECOMMENDED that the Museums Association and/or the Association of Independent Museums should consider providing network events for informal exchange of experience and information specific to devolved museums.

Partnerships and Synergies 1.570 The current preference in the public sector is for larger, conglomerate

organisations that provide economies of scale, ease of control and the ability to cut across individual services in support of clear, high-level strategic agendas. Devolution to small organisations appears to be at odds with this trend. Smaller units, it has been argued, create inward-looking silos that attend to detail but fail to seize larger opportunities.

1.571 However one-size-fits-all solutions should be treated with caution. Many

successful businesses – especially in the knowledge sector - are small, focused and flexible. While there are benefits for government in developing broad-ranging strategic perspectives at policy level, the most successful means of delivering those policies need not take the same form. While some companies are consolidating by merging with their former rivals within new corporate entities, others are breaking-up into strategic business units and encouraged to compete on their own terms.

1.572 The devolution of museums belongs to the latter model. Rather than develop

their own back-office functions, many buy in these services from others, keeping internal administrative costs to a minimum. In terms of programmes and activities, their experience suggests that they have no fewer partnerships, nor are engaged in any fewer cross-cutting initiatives, than museum services directly delivered by local councils. This has been achieved by outward-looking attitudes being engendered within the trusts, with staff being authorised to make connections where they are appropriate, but also by senior management – and especially chief executives – patrolling the edges of the organisation’s interests to identify where alliances may exist with other bodies that may not appear to be natural museum partners.


1.573 The experience of the devolved museums is that, in many cases, generating effective collaborations is easier than it might have been in a local authority. The reasons given included the following:

a) the ability to make speedy decisions to participate (especially where there

are budget implications); b) it was possible to seize opportunities for collaborations that went with the

grain of the museum’s mission rather than having to adopt contrived projects merely because of being part of a particular local authority department;

c) the greater stability and sense of direction enabled the museum trust to

act as a stable-state catalyst and enable synergies to develop that were not possible in local authorities where threats to jobs, budgets and status were under threat from frequent structural change; and

d) local authority services found external partnerships with a museum trust

more attractive than with an internal unit of the council because, at a political level, relationships with external bodies represents an achievement, while internal collaboration is taken for granted.

1.574 That the museum trust’s mission may appear less grounded in a local

authority’s corporate priorities does not mean that there are no opportunities for connections to be made or for partnerships and collaborations, which can be articulated in a . This appears to be as true for smaller museum trusts as much as for their larger counterparts.

‘Stabilisation’

1.575 Two devolutions (Sheffield Galleries and Museums Trust and the South London Gallery) were a direct result of the influence of the Arts Council’s Stabilisation Fund, which made future grant support conditional on devolution to a museum trust. The Heritage Lottery Fund, which has been the main funder of museum projects in recent years, has been largely disinterested in types of governance and management, preferring to assess business plans based on organisational arrangements proposed by the applicant. Similarly, MLA has not taken these issues into account when considering membership of museum hubs, and is not proposing any change to this practice in the foreseeable future.

1.576 The consequence of this is that museums (or the local authorities that run them) are not challenged about key governance issues when seeking substantial investment. It may be that as a consequence they are likely to duck the hard decisions that these represent, and focus attention on development schemes which they perceive as necessary but which might not deliver their full potential because of the environment in which they operate.



1.577 On the other hand, devolved museums and galleries apart, the Arts Council’s stabilisation interventions have not invariably been successful, and it may be that the key issues are incapable of being managed from outside. This may suggest that training, development and experience-sharing represents a better investment than external interventions.

When Things Go Wrong: A Case Study

1.578 Although there have been isolated instances of devolved arrangements in UK museums becoming unstuck, there has been, as yet, no major collapse of a museum devolved by a local authority to a museum trust. This is not to say that such events cannot happen. The recent case of the Milwaukee Public Museum, in the United States, presents a relevant case study92.

1.579 The Milwaukee Public Museum (MPM) was founded in 1882 when the City of

Milwaukee accepted some 20,000 objects and specimens from the Natural History Society of Wisconsin for the purpose of creating a public museum. For the following eight decades the museum was directly provided by the City Council, and established a national reputation for its natural history, anthropology and history collections. In 1976 it was transferred from the City to Milwaukee County, which broadened its funding base.

1.580 Following a review to consider alternative funding for the Museum, the County decided in 1991 to transfer the museum’s operation to a not-for-profit organisation, which began its operations in 1992. The County retained the ownership of the collections, the museum buildings and land (which it leased to MPM), and committed itself to an annual grant of $4.3 million for the five years to 1997.

1.581 This arrangement between County and MPM was renegotiated in 1997, at

which time endowment funds that had been retained by the County were transferred to MPM. The $4.3 million grant was continued for a further five-year period. Pending finalisation of a successor agreement, the arrangement was continued by mutual consent to the end of 2004/5, with annual grants of $4.085 million and $3.888 agreed for 2003/4 and 2004/5 respectively.

1.582 In March 2005 a new twenty-year Agreement was finalised between the

Council and MPM. This would bring to the Museum an annual grant of $3.15 million, and an additional $7.5 million towards building improvements to be carried out by the MPM during the coming twenty years, but payable during the first seven years of the agreement.

1.583 During the final stages of the preparation of the agreement, the County were

advised by the museum of a projected $447,000 shortfall for the year just ending. This caused no immediate concern, as the museum had reported balanced budgets or small operating surpluses from 1993 to 2002, followed by a $1.9 million surplus to 31 August 2003 (MPM’s year-end), and a deficit of $223,000 for the following year.

92 Milwaukee County Department of Audit (2005)

1.584 In fact, by May the actual deficit was $6.4 million – 28% of the operating

budget - the causes of which were claimed by MPM to be due to over-ambitious budgeting, fundraising shortfalls and the requirement to make deficit pension contributions for former County employees who had transferred to the MPM in 1992. More detailed examination showed that the losses included $230,000 on rental of facilities for corporate functions, and $650,000 on retail. The loss was also during a year when the Museum received substantial attendances for a special exhibition on Egypt. A further loss of $7 million was forecast for the financial year ending in August 2005.

1.585 It also became apparent that MPM was approaching insolvency, in being

unable to meet its debts as they came due. It transpired that $4.5 million of the Museum’s endowment – which, although it should have been ring-fenced, was kept in the same bank accounts as the Museum’s general funds – had been used to sustain cashflow.

1.586 The County government’s response was speedy, prudent and helpful. It

declined to execute the which, although agreed in March, had yet to be signed, and initiated an investigation into the MPM’s financial position. At the same time it guaranteed a $6 million credit line and appointed a Financial Oversight Committee which led to MPM establishing a $12.7 budget for the Museum – a 42% reduction on the previous year, which required 112 redundancies – 42% of the Museum’s workforce, with the remaining staff accepting a 10% pay cut to avoid further redundancies. As a consequence the Museum’s curatorial team was reduced from 35 to 7 and its exhibition staff from 27 to ten. These budget cuts, though stabilising MPM’s position, did not address its outstanding debt.

1.587 The MPM board – largely comprised of business people, though there were

some council nominees - pledged $700,000 of their own money in response to the crisis. The Museum’s chief executive resigned, to be replaced by the chief executive of a neighbouring County authority (an elected office). The chairman of the board also resigned, as did the chair of MPM’s Audit and Finance Committee. The Museum’s chief financial officer had resigned the month before the collapse became public.

1.588 The collapse at Milwaukee was not the result of a single factor, or caused by a sudden failure. The key issues appear to have been:

the Museum’s direction was one of continuous expansion (its budget more than doubled between 2000 and 2004) but its funding base remained tied to the City – ultimately expansion outgrew its resource base;

over-optimistic income budgets that were rolled forward to succeeding

years irrespective of actual performance;

successive chief executives’ delegation of the Museum’s day-to day operation to the head of finance, while they focused on development and


fundraising – the result was the museum’s financial affairs were in a single set of hands, and that person did not openly acknowledge the museum’s financial difficulties;

the Museum’s endowment was held in the same bank account as its

unrestricted funds, enabling the money to be accessed and spent even though the Board had required its approval before the endowment could be touched;

the Museum relied on the Council for its internal audit, and this process

lacked critical rigour;

the 27-strong board had many irregular attenders, and rarely received timely and complete financial reports;

negative news was suppressed from board members, or tempered by

optimistic projections;

the track record of three year’s operating losses and the poor performance on commercial activities were not acted on; and

the level of the County’s core funding had reduced substantially over the

years. 1.589 While Milwaukee may be a long way away in terms of geography similar

issues have arisen in UK museums in past years, including in some devolved museums. Happily, never have they arisen at the same time, or on the same scale, to cause catastrophic results of the type experienced at Milwaukee. This is not to say that, in the future, they could not.

Museum Trusts: A Successful Model ?

1.590 There is no general agreement about what constitutes success in a museum context. Talk of success is generally in terms of projects, where planned outcomes have been achieved; or in terms of people, who have either reached senior posts or achieved some distinction or accolade; or in respect of museum visits, where everybody goes away happy and rewarded; or when major external funding has been secured.

1.591 Success is also measured in terms of achieving external endorsement of

organisational practice, such as through Museum Registration/Accreditation (museum minimum standards), Charter Mark (customer services and complaints), Investors in People (traing and development) and other relevent British Standards.

1.592 In recent years, the concept of success has become more aligned with

meeting performance targets, generally externally imposed. It can also be a mobile concept, as with the Audit Commission’s Comprehensive Performance



Assessment regime which sees what constitutes a ‘four star’ (‘Excellent’) local authority becoming more rigorous year on year.

1.593 There has been a deep nervousness in the museum world about concepts

such as success and excellence, and attempts to move matters forward have generally fallen on stony ground.93 Responses to the DCMS consultation paper Understanding the Future focus on the need for externally-developed systems and processes to capture data, and emphasise ‘soft’ approaches such as peer review and self-evaluation using MLA’s Museum Accreditation or Inspiring Learning For All initiatives as the basis for establishing quality.94 None of the suggestions adopt a comprehensive approach to continuous improvement in organisations.

1.594 The concept of ‘public value’, 95 which refers to the value created by

government through services, laws, regulation and other actions assimilates the need to understand what people value about services, and how they contribute to policies on determining what services are funded and how they are delivered and evaluated. The Demos work on Capturing Cultural Value, which has already led to a report for the Heritage Lottery Fund96 marks an early stage in developing this approach for the heritage sector.

1.595 All this suggests that success, quality and performance are delicate issues for

the museum sector, and not only in the UK. A United States study, which rehearsed similar concerns, 97 proposed that, to be acceptable in a museum context, measures of success need:

to be directly connected with the core values and mission of the museum;

to have reliable indicators of long-term organisational and financial health; and

to be easily verified and reported.

1.596 It suggests that the following areas would fit these criteria (ie, they are

mission-focused, long-term, and verifiable):

Quality of experience

Fulfillment of educational purpose

Institutional reputation

Management priorities and achievements

Calibre and diversity of staff

93 eg DCMS (1999) 94 DCMS (2005), 20 95 Cabinet Office (2002) 96 Hewison & Holden (2004) 97 Anderson (2004)

Standards of governance

Scope and quality of collection

Contributions to scholarship

Contributions to conservation

Quality of exhibitions

Extent to which facilities reflect the museum’s primary purpose.

1.597 This represents a more rounded approach than is usually adopted, with all parts of the museum’s operations being represented. However, the risk of such a scheme merely is that attempts to translate the criteria into quantitative measures generate a mass of disconnected numbers that it proves difficult to reconcile in a way that enables their helpful use to improve the museum’s performance across the board.

1.598 These issues can be addressed by adopting the more holistic approach represented in the European Foundation for Quality Management (EFQM) Model, which was introduced in 1992. It is now the most widely-used organisational framework in Europe and has become the basis for the majority of national and regional Quality Awards. EFQM’s underlying principles are:

achieving results that more than satisfy all an organisation's stakeholders;

creating sustainable value for customers/users;

visionary and inspirational leadership, coupled with constancy of purpose;

managing the organisation through interdependent and inter-related

systems, processes and evidence;

maximising the contribution of employees through their development and involvement;

challenging the status quo and effecting change by using learning to

create innovation and improvement;

developing and maintaining value-adding partnerships; and

exceeding the minimum regulatory framework in which the organisation operates and being understanding and responsive to the expectations of society.

1.599 The Model (Exhibit 1.5.4) considers organisational performance in the areas

of ‘enabling’ activities and ‘observed’ results. It does this with five enabling criteria and four results criteria. Performance is evaluated across the criteria by scoring the organisation (either by self-assessment or with the assistance of outside assessors) on how it responds to 32 standard statements. The



process uses a universal scoring and weighting system that treats all types of organisation alike, with no adjustments for size or type of organisation. It has been designed to encourage organisations to benchmark against others, or to check progress against past assessments. Areas for improvement are identified against poor performance relative to the criteria.

1.5001 The Model’s non-prescriptive approach recognises there are many

approaches to achieving sustainable excellence in all aspects of performance, and can be used for self-assessment, to benchmark with others, to help identify areas for improvement, or even as an organisational management structure.

Exhibit 1,5.4 The EFQM Excellence Model (© EFQM) 1.5002 Although now widely used in both central government departments, its

agencies and local government, EFQM has yet to be widely adopted by museums. However, its non-prescriptive nature and holistic approach makes it eminently suitable for use in this context.

Lead

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ip

Pro

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es

Key

Per

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ance

Res

ultsPeople

Policy &Strategy

Partnerships & Resources

Society Results

CustomerResults

PeopleResults

Innovation and Learning

Enablers Results

ANNEX Constitutional Forms of Outsourced Organisations 1A.02 This Annex summarises the types of constitutional forms adopted by not-for-

profit organisations delivering services for local authorities, indicating how appropriate they are for museum trusts.

The Industrial and Provident Society (IPS)

1A.02 An IPS is a membership body registered under the Industrial and Provident

Societies Acts 1965 - 1978, controlled by a Committee of Management. The Registrar of Friendly Societies will only register an IPS if the organisation is to be a co-operative or is to carry on business for the benefit of the community. If an IPS is established for charitable purposes and accepted by the Inland Revenue as such, it will obtain all the fiscal benefits of charitable status without the need to register: it would be an exempt charity under Schedule 2 of the Charities Act 1993. The constitutional form of the IPS was intended for co-operative, ‘one member, one vote’ membership organisations which may not always be appropriate.

1A.03 The employee-owned IPS, with some independent board members but its

employees electing (and therefore controlling) the majority of seats on the board, has been a model adopted in the leisure sector. This format is ineligible for charitable status, as most of its board would have a personal financial interest. It therefore cannot benefit from the fiscal advantages that apply to charities, and it would not be eligible for participation in the Museum Accreditation scheme.

1A.04 The administrative and regulatory structure of an IPS is more old-fashioned and

cumbersome than that for a charitable company, and its set-up costs are high. Additionally, although this form of constitution is common in the social housing sector, it is relatively unknown to funding bodies in the heritage sector, which would tend to inhibit support.

The Charitable Trust or Charitable Unincorporated Body

1A.05 The word ‘trust’ is here used in its proper meaning - assets held by a body of

trustees for the benefit of beneficiaries - rather than its loose use to describe any body with charitable status. Like unincorporated associations, such bodies have no legal personality of their own, so all their contractual and financial responsibilities fall individually and collectively on their members. This form of governance is only suited to the small organisations or to those that have no significant liabilities.

The Charitable Company Limited by Guarantee (CCLG)

1A.06 This is a legal entity owned by its members and controlled by its directors

(sometimes called trustees if the body is charitable or not-for-profit); each



member guarantees to pay a nominal sum (usually £1) on the company’s insolvent liquidation. It has a legal personality (so that it can enter into contracts in its own name), a greater degree of mechanical flexibility in terms of its governance, and the arrangement provides members of the charity’s governing body with some measure of protection in the case of insolvency. Their governing bodies are required to discharge twin responsibilities - those that apply to charity trustees, and those applicable to company directors. These duties can be summarised as:

a) carrying out the charity’s charitable objects in accordance with its

constitution; b) protecting the charity’s property;

c) not receiving any payment or financial benefit from their office; d) being loyal to its beneficiaries, and avoiding conflicts between personal

interests and duty to the charity; e) acting reasonably and carefully, exercising the same degree of care as

would prudent persons carrying out their own or business affairs; f) filing with the Charity Commission and Companies Registrar the

information and accounts required by law; and g) always acting in the charity’s best interests98, within the charity’s powers,

using care and skill, and complying with statutory obligations.

1A.07 The company has to be incorporated at Companies House (an inexpensive service that can be delivered in a single day), following which it applies to the Charity Commission for registration as a charity. Operation of a museum is a charitable purpose as being of public benefit in its own right, and registration can also be achieved for educational purposes99. Everything it does must be wholly and exclusively charitable, and it cannot engage in substantial non-charitable commercial activities - even where these are carried out for the charity’s benefit.

1A.08 The CCLG has been the most common form of charitable constitution for

museums. However, its major constraint for local authorities is the requirement to be independent of all outside concerns, with its trustees always having to act in the charity’s best interests; the Charity Commission looks closely at charities formed to operate former local authority services to ensure that they are truly independent, and not functioning under the control of a local authority. As a consequence, when sitting on the Board of a company, Elected Members or

98 In July 2005 the Charity Commission began to consult on its Policy Statement on Charities

and Public Service Delivery, with the aim of clarifying its own position on charities delivering public services – an issue on which the Commission is neutral. The Policy Statement focuses on ensuring that charities retain their independence, remain focused on their mission, and meet the needs of the people they exist to benefit.

99 see para 2.201


Officers of local authorities must always act in the best interests of the charity, not of the council; the council may not require the CCLG to purchase from it services such as finance, payroll and legal advice; and any changes to the charity’s primary purpose cannot be imposed by the council, the consent of the Charity Commission being required. Thus the operation of a CCLG requires diligence and care.

The Non-Charitable Company Limited by Guarantee (NCCLG)

1A.09 This is in all respects similar to a CCLG, though it does not have the fiscal benefits of a charity and, as a private body, nor would it be eligible for participation in the Museum Accreditation scheme. A NCCLG may be a Community Interest Company.100

The Charitable Company Limited by Shares (CCLS) 1A.10 The charitable company limited by shares may also be a Community Interest

Company.101 It is the usual form of governing instrument for a commercial business, but it is rarely used for a charity due to the prohibition on their distributing profits for private purposes. In the case of devolutions from local authorities there are also issues concerning share ownership and, if the council was a major shareholder, how far this compromised the charity’s independence. To achieve charitable status, the Memorandum and Articles of Association would at least need to:

a) irrevocably preclude distribution of dividends or surplus assets in winding-

up to any other bodies than charities;

b) prevent income or assets ‘leaking’ from the charity;

c) limit the number trustees who have any connection with any other single body (perhaps to no more than 20%), and that they hold all the special shares enabling them to exercise control of the organisation solely in the charitable interest;

d) provide for a special class of share granting exclusive voting rights as

against any other class of share;

e) restrict the chair of the trustees and members of committees to ‘unconnected’ trustees;

f) require, that besides majority decisions by the board, votes also require

majority decisions of unconnected trustees; and

g) not give powers to any shareholder to remove any unconnected trustee without the consent of the unconnected trustees.

100 see para 1A.012 101 see para 1A.012

1A.011 These complications, and the reputational issues that derive from their ineligibility for exemption from the requirement to use the word ‘limited’ (or ‘ltd’) in their name, against the relative simplicity of guarantee companies - and the additional burden placed on the board and trustees – means that such bodies are generally to be avoided. They should only be considered in exceptional circumstances, recognising that their longer-term administration may prove more onerous than other forms of constitution.

The Community Interest Company (CIC) 1A.012 Community Interest Companies (CICs) are limited companies with special

additional features created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. This is achieved by a ‘community interest test’ and ‘asset lock’, which together ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes. A CIC cannot be a charity or IPS, and does not enjoy any fiscal advantages. Registration of a company as a CIC has to be approved by the Regulator, who also has a continuing monitoring and enforcement role.

The Charitable Incorporated Organisation (CIO)

1A.013 The Charities Bill 2005/6 proposes a new form of incorporation for the charity sector – the Charitable Incorporated Organisation (CIO). Its purpose would be to give charities the benefit of legal identity and limited liability without the need for incorporation as a company, with all that brings by way of designing constitutional arrangements around the requirements of the Companies Act, separate regulation by Companies House, and duplicate annual filing regimes. These advantages suggest that, in the future, adoption of the CIO form may be preferred to that of the CCLG.


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Appendix A Project Steering Group Stella Atkintan Local Government Association Paul Barnes Department of Culture, Media & Sport Nick Dodd Chief Executive, Sheffield Galleries & Museums Trust Gina Lane Director, Standards, Collections & Workforce Development,

MLA (Chair) Ian Lawley Head of Culture, Stoke-on-Trent City Council Emmeline Leary Museum Standards Officer, MLA Diane Lees Vice-Chairman, Association of Independent Museums Mary Taylor The Museums Association David Uffindell Export Licensing Manager, MLA (Secretary) Appendix B List of Consultees Janet Barnes Chief Executive, York Museums Trust Peter Berridge General Manager (Museums), Colchester Borough Council Howard Coutts Keeper of Ceramics, Bowes Museum Tim Craven Curator, Southampton City Art Gallery Nick Dodd Chief Executive, Sheffield Galleries & Museums Trust Jill Draper Estate & Museums Manager, Gunnersbury Park Museum, CiP Caroline Dudley Head of Museums and Archives, Hampshire County Council Bill Ferris Chairman, Association of Independent Museums Steve Garland Head of Museums, Bolton Metropolitan Borough Council Anne-Marie Gill Education Officer, Bexley Heritage Trust Jean Grice Head of Culture, Braintree District Council John Hamshere Director, Sheffield Industrial Museums Trust Margot Heller Director, South London Gallery Mark Hilton Director of Finance & Administration, Sheffield Galleries &

Museums Trust Neil Jacques Cultural Services Officer, North Lincolnshire Council Lisa Jeffries Education Manager, Bowes Museum Adrian Jenkins Director, Bowes Museum Ian Lawley Head of Culture, Stoke-on-Trent City Council Matt Leng Business Manager, Bowes Museum Kevin Mason Director, Bodelwyddan Castle Trust Nicola Moyle Director, Plymouth Museum and Art Gallery Sam Mullins Director, London Transport Museum Fay Newman Curator, Bexley Heritage Trust Val Parr Clerical Assistant, Sheffield Industrial Museums Trust __________________________________________________________ Egeria: Transfer to Museum Trusts: Learning from Experience – Strategic Overview 135

Alison Pattison Curator, Goldalming Museum Catherine Peet Curator, Dacorum Heritage Trust Mark Potter Museums Assistant, Sheffield Industrial Museums Trust Martin Purslow Director, Bexley Heritage Trust David Rayner CBE Trustee, York Museums Trust Mark Taylor Director, The Museums Association Derek Todd Deputy Chief Executive, Thinktank Trust Vanessa Trevelyan Head, Norfolk Museums & Archaeology Service Steven Viney Museums Assistant, Sheffield Industrial Museums Trust Ian Walden Director, Black Country Museum Jane Whittaker Principal Keeper, Bowes Museum In addition, the York Museum Trust arranged a group discussion for staff members that had transferred from York City Council to the Museum Trust.


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